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Malpractices Exacerbate Certain Trades despite Downward Trend in Overall Complaints Problems with Online Shopping Persist and Do Not Overlook Risks of Pre-payment Consumption

  • 2017.01.25

The Consumer Council received 25,098 consumer complaints in 2016, a drop of 8% from the 27,378 cases during 2015.  Complaints about services accounted for 55% and the remaining 45% related to goods.

Since the Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance was fully implemented in July 2013, consumers have become more aware of the importance of self-protection.  Much credit goes to the efforts of all stakeholders over the years, and law enforcement agencies who have carried out actions to clamp down on unscrupulous sales practices, so that impact of the law can be manifested progressively.  In the past 2 years, complaints concerning unscrupulous sales practices lodged with the Council have decreased about 30% every year, from 2014's 6,265 cases to 2016's 3,075, which helped reverse the rising trend in overall complaints, with 2-year drop being recorded consecutively.

Last year's statistics revealed that complaints involving pre-payments by consumers continue to rise, with sums soaring 60% of purchase prices, despite an overall downward trend.  Complaints filed against certain industries such as fitness and yoga centres involving pre-payment transactions even rose 211%, reflecting a serious issue of concern.  Although the total number of complaints against beauty services dropped 10%, those associated with medical beauty sharply increased by 70%, which covered a range of issues, including treatment efficacy and sales tactics.  The nature of these problems requires immediate attention from the Government.  With the growing popularity of online shopping, problems are emerging.  The Council recommends a thorough review of existing legislations to fully protect online shoppers' rights and interests.

Top 5 Complaint Categories

Complaints against telecommunications services were at the top of all complaint categories among goods or services at 3,004 cases, representing 12% of all complaints.  These complaints have been at the top of the list for 17 consecutive years, however, numbers have been declining progressively since 2007.   Until 2007 annual complaints against telecommunications services usually numbered over 10,000 cases a year.  Cases in 2016 fell by 21% over 2015.  The majority of more recent complaints arise from enhanced consumer awareness of high charges for "roaming services" contributing to "shocking bills".  Under a series of multi-pronged measures, together with consumers' awakening to the importance of self-protection awareness, these particular problems have been ameliorated.

Second among the top five were travel industry complaints.  The 1,963 cases recorded, however, showed a significant 26% drop over 2015, when the Middle East Respiratory Syndrome struck South Korea and a bomb exploded in Bangkok, Thailand.  Many cases arose from consumers who rushed to change their travel itineraries but did not receive prompt response from airlines companies.  There were no similar incidents during 2016, resulting in a decline of 22% in complaints about air tickets and 47% regarding airline services.

A close third on the list were complaints about telecommunications equipment numbered a total of 1,827 cases, a jump of 9% year over year.  Among them, more than 200 cases arose from safety and refund concerns over a Samsung mobile phone model whose batteries could self-ignite. Discounting the related complaints, the complaints of this category were roughly equal to those in 2015.

Fourth on the list were electrical appliances with a total of 1,808 complaints, showing an increase of 7% over 2015.  Repair and maintenance services received the most complaints (701 cases), followed by product quality, (476 cases).  Complaints about fitness centres ranked fifth with 1,667 cases, a hefty 189% jump over 2015's 577 cases.  Among them, over 80% of the cases related to California Fitness and its affiliated businesses which ceased to operate in mid-2016.  What is noteworthy however is that, after discounting complaints against the California Fitness chain, complaints against the entire industry still saw an increase of 16% over 2015, indicating continued service quality failings among companies throughout the industry.

Service Quality and Repairs and Maintenance

With respect to the nature of complaints, issues related to quality of services amounted to 5,449 cases, or 22% of overall complaints.  It marked the first time in 5 years that quality of service issues surpassed both prices/charges disputes and sales practices complaints, as a most complained category.  Prices/charges disputes came second, though the numbers declined 9% over 2015 to 4,732.  Ranking third and fourth on the list were product quality (3,080 cases) and sales practices (3,075 cases) falling by 17% and 29% year-on-year respectively.

It is worthy of note that complaints about repairs and maintenance services grew 15% over 2015 to 2,383 cases, ranking fifth on the list.  Most complaints involved telecommunications products and electrical appliances, accounting for 60% of overall figures, with problems mainly arising from maintenance fees, charge disputes after warranty and outcome of maintenance.  In recent years, the Council has committed to advocating sustainable consumption, with concerns especially regarding durable goods, such as repair and maintenance on household appliances.  CHOICE magazine has also published a number of relevant reports in the past.  Should manufacturers and agents do a better job on repairs and maintenance, not just to prolong product life, there would be a significant drop in waste as well.

Pre-payment Consumption

Although overall numbers have come down last year, disputes over pre-payment transactions amounted to 4,728 cases, up 5% over 2015.  The relevant cases involved $70 million dollars in consumer expenditures, rising 60% over 2015's $45 million dollars.  Of that $70 million dollars, 60%, or $44 million dollars went to fitness and yoga centres.

Among industries that required pre-payment, fitness centres accounted for the biggest jump.  Of all complaints against fitness centres, over 93% – 1,562 cases – involved pre-payments.

The required amounts in pre-payment complaints related to fitness centres and beauty services generally involved greater consumer costs, with some businesses even pressing long-term membership schemes, enormous amounts of private coaching or beauty treatments that required tens of thousands of dollars.  Consumers risked financial loss in the event where the businesses closed down, leaving consumers unable to receive the services they paid for.  Complaints lodged with the Council show some consumers were forced to signing contracts, but later learned that services exceeded their needs.  Some even found it impossible to make satisfactory use of the services under normal circumstances.  Others might need to arrange loans to meet their debts.  The Council has continued its monitoring for consumers facing pre-payment issues.  In April last year, the Council openly sanctioned California Fitness lambasting its unscrupulous sales practices.  The Council, at the time, also proposed a cooling-off period to strengthen consumer protection.

In the meantime, the Council is studying how to minimise consumers' loss facing shop closures and establishment of a cooling-off period.  Results of the two studies are expected to be announced in due time, later this year.

Medical Beauty

Last year, the Council received 1,239 complaints against beauty services, a drop of 10% in number over 2015, but complaints targeting medical beauty climbed to 240 cases, a 70% jump year-on-year, involving over $4.6 million dollars, an increase of 36% over the previous year.

Complaints about medical beauty increased in all categories of medical beauty including late/non-delivery/loss of services whose number of disputes was 4 times higher than in 2015.  Disputes involving group purchases rose 1.5 times.  Shop closures grew 1.3 times.  Complaints relating to sales practices jumped by a multiple of 1.2.  Moreover, complaints associated with suspected unsafe products and serious damages after treatment accounted for 37 cases, an increase of 37%.  The Council reiterates that serious medical beauty incidents not only can traumatise consumers physically and mentally, they may result in life threatening situations.  The Council considers the situation worrisome. 

Broadcasting Services

Last year saw complaints against broadcasting services jump sharply from 332 cases to 608, 83% higher than the preceding year.  The complaints were mainly in relation to service quality of pay TV, price/charge disputes and alteration of signed contracts.  Many complaints concerning service providers failing to fulfill promises specified in the contracts, including cancellation of some sports programmes without notice.  The Council, in recent years, has directed close attention to the proliferation of service providers offering pay TV, through set top boxes, providing programming alternatives to conventional television broadcasting.  Respective complaints rose significantly last year and the Council continues to monitor the development of this industry.

Tourist Complaints

Last year, tourist complaints fell, overall, by 17% to 2,088 cases over 2015, a dip over two consecutive years.  Earlier complaints from tourists involving in the purchase of bird's nest, dried seafood, ginseng and Chinese herbal medicine dropped from 491 cases in 2015 to last year's 279 cases, down 43%.  Electrical appliances, however, drew an increase of 75% in the number of complaints, while sporting goods and personal care products also increased 50%.

Complaints from Mainland tourists also recorded a 22% dip to 1,571 cases, but complaints involving sporting goods and personal care products soared 70% and 57% to 34 and 121 cases respectively.

The Council noted that although complaints from the Mainland and overall tourists recorded a decline last year, according to figures revealed by the Hong Kong Tourism Board, the number of overall visitors in 2016 fell by 4.5% year-on-year.  The Council emphasises that the industry should exercise self-discipline to safeguard quality of products and services so that Hong Kong continues to enjoy its reputation as a "travel and shopping paradise".

Looking Back and Ahead

Over the past year, the Council released a number of research reports highly relevant to consumer life.  "Sustainable Consumption for a Better Future – A Study on Consumer Behaviour and Business Reporting", released in early 2016, advocates sustainable consumption. The report found that Hong Kong consumers are highly aware of sustainable consumption but are less willing to make further adjustments to their current habits.  The Council will continue its advocacy, educating the public on sustainable consumption in the future, to help the public at large translate their convictions into actions.

In addition, the Council released the latest "Auto-fuel Price Monitoring Report" last year, which revealed a downward trend of the international crude oil price, while pump prices charged by oil companies remained unchanged.  This served to widen the gap between the average prices for imported auto-fuel and pump prices.  The Council suggested the Government enhance market information disclosure, helping the public understand and monitor the fluctuation of fuel prices.

"The Role of Consumer Arbitration in the Alternative Dispute Resolution Regime for Consumer Protection" – released in the middle of last year – proposed a Consumer Dispute Resolution Centre that would deploy a "Mediation First, Arbitration Next" mechanism as a more equitable dispute resolution approach for consumers and traders. Not only would such a system save costs, which may arise from litigation, it also could speed up the time spent on dispute resolution.

The two reports released at year's end, namely "Online Retail – A Study on Hong Kong Consumer Attitudes, Business Practices and Legal Protection" and "Consumer Protection of Medical Beauty Services – A New Regulatory Regime", recommended regulating these two business categories.  The first report examined local consumer behaviour with regard to online shopping and analysed the existing regulatory regime for online retail.  The study showed that although consumer satisfaction with online shopping reached 98%, consumers lacked knowledge in certain consumer rights issues, such as accessibility of information, return/refund policy, privacy policy and legal protection.  The report revealed that Hong Kong legislations for the protection of online shopping lagged behind some countries and regions.  Last year saw complaints related to online shopping such as storage units, postal and courier services up more than 10%, reaching 133 cases.  Complaints about personal care products bought from online shops also surged 80%.  The Council is of the view that the Government should keep up with the times and examine the problems prevalent in every aspect of online shopping.  This should be done expeditiously through examination of existing regulations to safeguard consumers' rights and protections, while they shop online.

The most recent report on medical beauty released by the Council last month unveiled hidden risks lurking in sales practices and different aspects of treatment procedures.  The relevant authority has recently put forth recommendations on the regulation of medical devices – an important step toward the regulation of medical beauty.  Confined only to medical devices, however, the regulations do not fully address the range of problems in medical beauty services.  The Council suggests the Government introduce legislation to define clearly what constitutes a "medical beauty" service. The legislation should include a comprehensive licensing system, a cooling-off period on contracts and redress mechanism for consumers, to avoid further tragedies in relation to medical beauty services.

CHOICE magazine celebrated its 40th anniversary in 2016.  Since its first issue in 1976, CHOICE magazine has walked hand-in-hand with Hong Kong consumers.  It has been a consumer partner to witness radical changes in the consumer environment – from shopping at physical shops in the past, to today, when purchases from shops around the world are just a click away for anyone using a device connected online.

In the coming year, the Council as well as CHOICE magazine will continue to hold its ground and, as a matter of priority, to defend rights and interests of consumers, striving to become a trusted voice for them and foster a safe and sustainable consumer environment in a fair market