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Multiple Disputes over Service Provision Taken Over from Closed-Down Beauty Shops

  • 2015.12.15

Most beauty treatment packages are sold through prepayment.  They can be expensive and cost over ten thousand dollars.  When a beauty salon closes down or changes hands, consumers’ payments can go down the gurgler.  Would consumer rights be safeguarded by transferring the un-utilised treatments to a salon that is taking over? 

The Consumer Council has received more than a hundred of such complaints in the first 11 months of the year, which is a significant increase when compared to the total number of cases last year (61 cases).  As reflected in the cases, consumers, generally, know little about the so-called “transfer of business” between the closing and the taking-over beauty salons.  However, in order to minimise loss, consumers will consider transferring  the un-utilised treatments to the salon that is prepared to take over.

Unfortunately, complainants often have to commit another considerably amount for new treatment packages or agree to harsh terms before they can utilise the unused treatment services.  In these cases, sales practice of beauty salons are very questionable and unfortunately Consumer rights are further compromised.

In one of the cases, the new salon did not provide treatment services to clients of the took-over salon based on contract terms.  The complainant bought beauty treatment coupons from Company A at around $10,000 in October 2014.  In September this year, she found that the company had been taken-over by Company B without prior notification.  She still has about 30 treatments left unused.  She was approached by Company B to offer her the continuation of the services but the complainant had to sign certain document for confirmation.

Subsequently, the complainant visited Company B for treatment service.  However, she was told that the “detox machine” used by the old salon was not available and a new treatment costing about $6,000 was promoted to her.  To avoid spending more, the complainant counter-proposed to convert the remaining balance for some basic beauty services but the counter-proposal was rejected. 

Eventually, the staff suggested that she purchased another treatment by paying $3,000 and forfeiting 18 treatments in her existing package, otherwise the service would be terminated.  The complainant later reviewed the document she signed thoroughly and found it stated that Company B would provide the un-utilised treatment services owed by Company A for free.  Feeling that Company B has reneged on its promise, she filed a complaint to the Council.

Company B proposed to refund $3,000 to the complainant but make it clear that treatment services would not be provided thereafter. That means the un-utilised coupons from Company A would come to naught.  Considering the difficulty in seeking remedy, the complainant reluctantly  accepted the refund and felt aggrieved that consumer rights are unprotected.

In the second case, a complainant purchased 6 lymphatic massage treatments  ($2,388) and 50 beauty treatment ($5,000) from Company C.  She used 4 lymphatic massage treatments.  The complainant later was notified that the Tsuen Wan branch of Company C had been renamed as Company D in February 2015.  She visited Company D and she was told that customers of Company C could continue their treatments in Company D at a cost of $588 per treatment.  She was told that by paying an additional $6,000 she could become a member entitled to enjoy priority in booking and discounted treatment by $200 to $300 per treatment.  However, the original treatment was only $100, which means that there was approximately a fivefold increase in per treatment price and the number of treatments with her remaining balance would then be reduced from 50 to 8.5 times.  

The complainant found such terms too harsh to accept.  She made an inquiry to the Mong Kok Branch of Company C.  The staff claimed that the two branches were not related and therefore could not entertain her request.  The complainant believed that even if she accepted Company D’s proposal, it would be difficult for her to make an appointment.  She then turned to the Council for assistance.  She asked for an unconditional refund of $5,000 from Company C.

The complainant informed the Council that the Business Registration of Company C indicated that the 3 branch shops belong to the same group of business.  There was also no record of branch closure.  She therefore intended to file a claim to the Small Claims Tribunal for redress.    When staff of the Council followed up the case, the trader was firm in its refusal to refund.  Later, the trader and the complainant came to settlement and the complainant would continue to use the service.  

In the last case, the complainant was talked into purchasing a RF treatment package and integrated treatment package at $10,000 by a staff of Beauty Salon Group E in 2014.  The staff only issued two handwritten receipts which carried the name of the Group, terms and conditions, and signatures were required for verification. The unsuspecting complainant used part of the treatment services in one of the branch shops.

In May this year, the complainant learnt that the branch she frequented had ceased operation, that the salesperson who sold her the packages had left and the Group will refer her to other branches to continue with the treatment.  When the complainant later visited Mong Kok branch, she found that the computer record of the treatment packages she bought was vastly different from the receipts she had on hand.  There was no record of RF treatments.  Instead, there were records of treatment and beauty product purchases not verified by her and there were also records of her visiting Mong Kok and Admiralty branches for treatments.  Believing that she had been swindled, the complainant filed a complaint to the Council, demanding Group E to continue providing her with RF treatments.

Group E told the Council that the case involved suspected misconduct of their staff and they had reported the case to the Police.  They consider it inappropriate for them to follow up so they would only provide services based on computer records in the meantime.  The Council advised the complainant to seek legal advice to decide whether to pursue a civil claim.

Cases above showed that some beauty salons that has taken-over another business may make up reasons and excuses to make consumers placed in an unfavourable position, forced them to accept harsh terms or suffer more losses.  Consumers should take note of the details on receipts and agreements.  In the third case, the salesperson who signed a contract with consumer should be acting on behalf of the beauty salon group.  However, the other branches refused to honour the agreement on the claim that the terms of the agreement did not match the salon’s computer record. 

Since most beauty treatment packages are sold through prepayment, consumers should take note the following advices before entering into a contract for prepaid services:

  • Assess your financial capability and practical needs, resist enticements like discount and free gifts to avoid pre-payment in large amount; before committing to a contract, learn more about additional fees in case of alteration, cancellation and due to dissatisfaction with service performance; 
  • Consumers should always ask for official receipts which should carry details like services purchased and their prices.  In case of dispute, these are documents used to seek redress.  Never rely on handwritten receipts or verbal agreements;
  • In case a beauty salon is closed, some credit cards come with a chargeback option.  If the consumer has paid for the service in a lump sum but the trader is unable to supply the product or service, the consumer can apply for a refund equivalent services according to the terms of the card issuer.  For consumers who use other payment methods, they can make a claim through civil proceedings but the chances of success will depend on circumstances of the case.  

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