Consumer Protection (Fair Trading) (Amendment) Bill

Order for Second Reading read.

The Minister of State for Trade and Industry (Mr Teo Ser Luck): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

"Lemon Laws" refer to consumer protection laws that provide remedies against goods with latent defects, also known as "lemons". These lemons usually fail to meet standards of quality and performance, even after repeated repairs, and such laws can be found in advanced countries such as the UK and EU, and typically obligate the retailers to repair, replace, or refund the price of defective goods.

In September 2008, MTI and Consumers Association of Singapore (CASE), under its President Yeo Guat Kwang, jointly established a taskforce to determine if there was a need for such a law in Singapore and, if so, the appropriate scope and form they should take. The Taskforce comprised representatives from both consumer and business bodies to ensure a balanced view point.

Introducing Lemon Laws in Singapore will bring us in line with the standard of consumer protection in international jurisdictions and assure both locals and tourists that the products they buy are of good quality. It will encourage good business practices and favour good retailers, many of whom already have robust return policies. This will, in turn, raise the standing of the retail industry in Singapore.

The Taskforce found that the key features of lemon laws, as implemented in developed economies, were already present in Singapore's laws. However, there were some areas for improvement.

First, there is a lack of clarity on a consumer's period for exercising his rights. Currently, the consumer can reject defective goods and seek a refund, but he would lose his right to reject the goods if he does not do so within "a reasonable time". The law does not state explicitly what is considered "a reasonable time", and this is subject to determination by the courts. The law is also not clear on who has the burden of proof.

Second, our existing laws provide a limited range of recourse. Consumers are only entitled to reject goods that are not of satisfactory quality and obtain a refund. Thus, the Taskforce recommended making express provisions for repair and replacement to allow consumers, retailers and the courts additional options to resolve defects that occur. CASE highlighted that such provisions would address the key problem of some retailers refusing to replace defective goods after multiple failed attempts to repair. Retailers also gave feedback that the inclusion of the options of repair and replacement would allow them more flexibility. Therefore, the proposed amendments seek to clarify timelines and burden of proof, and to expand and make more explicit the remedies available to both consumers and businesses.

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Using the Taskforce's recommendations as a basis for the proposed amendments, we conducted a series of public consultations and focus group discussions from December 2010 to November 2011. In the process, we met with and heard from large and small retailers as well as sector-specific retailers such as the motor traders, and we thank the many who contributed their views and suggestions to the improvement of the Amendment Bill. We sought to weigh the various considerations from different perspectives, and arrive at a policy position that is in the interest of our country as a whole. We also recognised the need to balance greater consumer protection and impact on business costs.

Sir, let me now outline the main amendments. The new legislation will provide clearer rules on the burden of proof. If a consumer reports that the goods he purchased did not conform to the sale contract within six months of delivery, it is presumed that the non-conformity existed at the time of delivery, unless the retailer can prove otherwise. Non-conformity with contract is already defined under existing laws, such as the Sale of Goods Act, and includes situations where goods are not of satisfactory quality, or fit for the purpose it is purchased for.

This presumption will not apply if it is incompatible with the nature of the goods. For example, perishable goods would not be expected to last longer than their normal shelf life. And if the non-conformity is found after six months of delivery, it is for the consumer to prove that the non-conformity existed at the time of delivery. The same provision can also be found in EU and UK's lemon laws.

The new section 12C of the Consumer Protection (Fair Trading) Act provides that for goods that do not conform to the sale contract at the time of delivery, the consumer may require the retailer to repair or replace the goods. If the cost of the remedy demanded by the consumer is disproportionate in comparison, the retailer may offer one of the alternative remedies provided for in the legislation.

If both the repair and replacement remedies are not possible, or disproportionately costly to the retailer, or cannot be completed within a reasonable time and without significant inconvenience to the consumer, the consumer may ask for a reduction in price or return the product for a refund. As per existing laws, the refunded amount may be reduced to take into account the use that the consumer had of the goods.

In terms of coverage, the Lemon Law will apply to all goods, which can range from general consumer products such as electronics and clothing to big-ticket items such as motorcycles and cars. Consumables and perishables are also covered. However, the "rebuttable presumption" that defects discovered within six months of delivery existed at the point of delivery will only apply up to the normal shelf life of the consumable or perishable.

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Secondhand goods and vehicles are included in the proposed legislation as protection is likely to be most needed for such goods. This is also in line with Lemon Laws in overseas jurisdictions. However, the definition of "satisfactory quality" would take into account the goods' age at the time of delivery and the price paid. In other words, someone buying a 10-year-old car from a dealer could not reasonably expect it to be like a brand new car. However, he can expect it to perform in a manner that may be reasonably expected of a car of that mileage and model. If it does not do so, the consumer can seek remedies from the dealer.

Services are not covered as the remedies under the Lemon Law regime are tailored for goods, and are generally inappropriate for services. For example, it is impossible to return the service which has already been rendered.

Some businesses we consulted have asked if discounted products or sale items, with slight defects or limitations, can be excluded from the proposed law. Such goods are not specifically excluded, but any defects or limitations of these goods should be pointed out to the consumer before the transaction, and the retailer would not be held liable for these defects or limitations. When it is pointed out, it has to be very specific and to the point of the defect.

Retailers have also asked if goods can be excluded if they are sold "as is" or "as seen". Even under the existing law, the retailer cannot deny the consumer his rights to remedies by stipulating that the sale is "as is" or "as seen", except in the case of auctions or a competitive tender. As such, retailers cannot exclude the transaction from the Lemon Law, by simply displaying a notice saying, "we do not give refunds under any circumstances" or that "an item has been sold as it is". Therefore, retailers should be transparent at the point of sale, through appropriate labelling and disclaimers. For clarity, the retailer should document any defects and limitations on the sales contract, invoice or packaging.

Members of the public have also asked if properties and building defects are covered under the proposed law. There is already existing legislation governing the sale and purchase of new or uncompleted properties. Under the Housing Developers (Control & Licensing) Act and the Sale of Commercial Properties Act, the standard Sale and Purchase Agreement provides for a one-year defects liability period during which the developer is required to rectify any defects in the property, at the developer's own cost. Beyond the one-year defects liability period, purchasers can still take civil action against the developer for latent defects on grounds of negligence or breach of contract, within six years from the date that the damage arose, or three years from the date that the damage was discovered, and whichever is later. This covers HDB flats as well. In addition, HDB gives flat buyers an extended warranty for the protection of the flat against building defects.

Therefore, as properties and building defects are covered by other existing legislation, the Lemon Law does not cover them. In most jurisdictions, the laws governing properties and goods are also kept separate as they are very different in nature. For example, the broader range of remedies under our proposed "Lemon Law", such as replacement, would not be applicable for property.

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We have also received feedback requesting that the law be more specific, for example, by defining precisely what constitutes a defect and specifying the number of repairs before a consumer is entitled to a replacement. Because we want the law to be more comprehensive in coverage, and given the diverse range of goods in the market, it will not be possible to define specific terms for all goods and all circumstances. The law, as currently drafted, provides flexibility and not prescriptive for both retailer and consumer to work out a mutually acceptable arrangement.

Nonetheless, there are certain guidelines on how the courts will apply the law. The Sale of Goods Act provides guidance on what constitutes non-conformity with a sale contract. Also, as the intent of the law is to cover latent defects in goods, the consumer will not be able to seek recourse for wear and tear due to usage of the goods.

On replacement and refunds, the replacement should conform to the contract, that is, of the quality, make, model, and condition that are expected. The replacement offered to the consumer could take into account wear and tear due to usage by the consumer and need not always be new. The consumer could weigh the options between accepting, for example, a relatively new set, versus asking for other remedies such as a reduction in price, or returning the product for a refund.

With these provisions in place, consumers will now enjoy more recourse for defective goods. However, reflecting the balanced position, retailers also enjoy safeguards against frivolous claims. First, a retailer may offer an alternative if the remedy requested by the consumer is disproportionately costly, so long as his proposed remedy does not cause significant inconvenience to the consumer. A consumer must also give the retailer a reasonable time to comply with the requested remedy, such as repair or replacement, before seeking an alternative remedy such as refund or reduction in price.

Second, consumers are not entitled to a remedy if they damaged the item, misused it and caused the fault, or tried to repair it themselves, or had someone else try to repair it, resulting in damage to the item. The remedies are also not available if the consumer knew about the fault before they bought the goods, or if they simply changed their mind and no longer wanted the item.

The new law will also not remove the existing remedies available to both businesses and consumers, such as product guarantees or warranties, retailers' own return policies and other remedies available under existing legislation, such as the Sale of Goods Act and the common law.

Sir, I will now move on to the consequential amendments.

The new sections 6 to 6G of the Hire Purchase Act (HPA) will update the implied terms in the HPA to be consistent with those in the Sale of Goods Act and Supply of Goods Act. This will allow consumers who made a hire purchase to rely on a breach of these implied terms, such as the implied term of satisfactory quality, to trigger the new provisions under the Lemon Law.

In addition, the HPA's existing jurisdiction cap of $20,000 for consumer goods and $55,000, excluding COE, for motor vehicles shall not apply to these updated implied terms. This will allow consumers to utilise the new provisions under the Lemon Law, even if the values of their hire purchase goods or vehicles exceed this cap. Therefore, a consumer who bought a $30,000 home theatre system on hire purchase will now be able to seek remedies under the new Lemon Law if it contained inherent defects or quality issues.

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As requested during our consultation with the industry, in order to help motor traders defray costs and encourage them to offer replacements for lemon vehicles, MOT and LTA have proposed amendments to the Road Traffic Act. The amendments allow rules to be made for the transfer of Additional Registration Fee (ARF) and the Certificate of Entitlement (COE) from a defective vehicle to a replacement vehicle if the defective vehicle meets two criteria: First, the defect occurs within one year of the vehicle's registration in Singapore, or within 20,000 kilometres of the vehicle's mileage, whichever is earlier; and, second, at least three attempts have been made to repair the defect, or at least one attempt if the defect is safety-related, within one year from the date the defect is reported.

This transfer will also be subject to certain conditions, which include the disposal of the defective vehicle within a month of its replacement. To illustrate, take for example, a six-month old car that continues to have faulty brakes after a dealer has attempted to repair. The retailer need not pay for the additional set of ARF and COE for the replacement car that he offers to the consumer.

In conclusion, Sir, the proposed amendments in this Bill will make the existing consumer protection framework more robust. In drafting the Bill, we have taken great care to ensure that it is both pro-consumer and business-friendly.

To allow industry time to adjust, the amendments are proposed to come into effect only on 1 September 2012, approximately six months from now. My Ministry is already working with CASE and the Trade Associations to develop consumer guides and business advisories to provide greater clarity to both consumers and businesses. And these guides will highlight best practices and various claim scenarios have been issued to several Trade Associations. CASE will also commence a Lemon Law education campaign from April this year to better educate consumers on their rights in such situations. Sir, I beg to move.

Question proposed.

3.26 pm

Mr Lim Biow Chuan (Mountbatten): Mr Speaker, allow me to declare my interest in speaking on this topic as the Vice-President of the Consumers Association of Singapore (CASE).

Sir, I am not sure whether there are any Members of this House who had previously bought goods which were defective and could not be repaired after multiple attempts. Unfortunately, I had. About five years ago, I bought a mobile phone from a reputable telephone communication company. Barely a week after I bought the phone, it simply shut down without notice. So for that day, I thought I had such a peaceful day with no phone calls. But the reality was that I could not be contacted because the phone was turned off. In computer language, the phone simply hanged. Not just once but it occurred a few more times during that week. Most of us would agree that a phone which keeps switching itself off is not reliable. If you do not believe me, you can check your phone and see whether it is on or not. I brought the phone to the service centre for repair. On the first occasion, the service centre told me that the phone needed a software upgrade. The service staff also told me that the phone had to be retained for the software upgrade and asked me to come back three days later to collect the repaired phone. No replacement phone was given. I asked the staff, "What do I do, no phone?" The reply, "Well, that's your own problem."

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However, after the software upgrade was given, the problem was not resolved and the phone continued with its erratic behaviour of switching off as and when it felt like it. On the second and third occasions when I brought the phone back to the service centre, they told me that the phone had a software bug which had to be cleared. Each time I brought the phone to the service centre, I wasted time travelling to the service centre, and then I spent one-and-a-half to two hours waiting for the service staff to attend to me. This was five years ago.

Sir, last month, because my telephone line contract was due for renewal, I bought a new smart phone. Unfortunately, like the previous one, five years ago, this phone also hanged repeatedly. The first time I went to the service centre, there were 25 persons waiting in the queue, just to take a number. Another 15 persons were waiting for their turn for the service staff to attend to them. I gave up waiting.

Last Monday, I went to the service centre early in the morning and this time, the service staff told me that it was a software problem. They removed all the data in the smart phone and told me that they had cleared the bug in the phone. Since Monday, the phone had shut down by itself five times. So, currently, I am back to using my old phone.

Sir, when something like that happens to you, it is extremely unproductive and very frustrating. First, it was such a waste of time sending the phone for repair again and again. Secondly, it was very irritating that a brand new phone could malfunction in such a manner. I hope that Members of this House do not see me as simply complaining. I share my experience so that Members can appreciate the frustration and anger of a consumer who has bought a defective product or a "lemon".

I am not alone in this experience. Many consumers have complained that they had bought defective electrical or electronic products, or furniture, and they could not obtain any refund from the retailer. Some had even bought a motor car which broke down frequently – for example, the car could not start or stalled in the middle of the road. So can you imagine, you wake up in the morning, you go to your car, you are not sure whether your car will start or not. That is the kind of frustration that a motorist will feel if he bought a "lemon" car. Or the air-conditioner in the brand new car does not work.

For a person who had paid such high price for such a motor car which turned out to be unreliable, one can imagine how upset the motorist would be. Some consumers had also bought electrical products which could not be switched on. For example, you buy a rice cooker and after you turn it on, the rice does not cook. Or you buy a hair dryer and it cannot operate at all. Or we have instances of a consumer who bought a new set of furniture and when the furniture was delivered, the leather was mouldy, or it was peeling.

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In 2010, the Consumers Association of Singapore received a total of 1,753 complaints about defective products. Three hundred and thirteen complaints relate to defective mobile phones, another 313 relate to electrical and electronic products and 451 relate to furniture. This was in 2010.

Last year, the number of complaints went up to 1,793 complaints with 301 complaints about defective phones; 338 complaints about defective electrical and electronic products and 137 complaints about defective motor cars. So, for Members' reference, I have put up the statistics to be flashed out on the screen [ A slide was shown to hon Members ].

Sir, there must be many more cases where the consumers chose not to complain to CASE or to pursue the matter further. For this reason, the Consumers Association of Singapore has been actively advocating for a change in the law to ensure that consumers in Singapore receive better protection whenever they buy a "lemon" product or a product which is defective and does not meet the expected standard of quality or performance. The consumer has paid good money for the product. They are entitled to expect that the product which they have paid for works well. If they have bought a "lemon", they should have the law on their side and expect that they can get an exchange for the defective product or a refund of the price.

The current proposed amendment to the Consumer Protection (Fair Trading) Act would give consumers the right to require a retailer or the seller of the goods to repair or replace the good within a reasonable time and without causing insignificant inconvenience to the consumer. In certain situations, the consumer can also ask the retailer to refund the costs of the defective product or provide a reasonable rebate off the price of the defective goods.

Sir, the Bill also provides a presumption that the goods are defective from the time of delivery if the defects are found within six months of the delivery of the goods. Without this law, consumers will have to prove that the defective goods are in breach of expressed terms of contract or they are not of satisfactory quality. The remedy for such a breach is usually to reject the goods and seek refund only, and the consumer must also reject such goods within a reasonable time.

Sir, this law by itself is far better for the consumers. This law will give consumers and tourists alike the confidence that there are appropriate laws protecting consumers who have bought defective products. Some retailers or sellers have expressed that this law may be abused by customers who seek refunds after they have used the product. For example, some retailers have said: "Well, after you have bought the product, you use it. And, after you have used it, you do not want it anymore. You claim that it is a 'lemon' and you return it."

Sir, the feedback from established retailers who have a "money back guarantee" return policy has suggested that such abuses are not frequent. In fact, one established retailer has told me that it is far better to give a refund or exchange than to be bogged down with an unhappy customer. He did not wish to spend hours of his time unproductively trying to answer to complaints by an unhappy customer. Sir, I also want to say that many potential car buyers and many consumers are also supportive of this law.

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I have the following queries which I would like to ask the Minister of State: section 12D(1) provides that the transferee (being the consumer) can rescind the contract with regard to the goods or can ask for reduction in the amount to be paid for the transfer of the goods in question by an appropriate amount. May I ask the Minister of State, does this mean that the refund or the rebate as the case may be must be in cash? Can a consumer or a transferee decline to accept vouchers in lieu of the defective product? If a retailer or seller says, "let me give you vouchers in exchange", can a consumer decline and say, "I only want cash."

Section 12E of the Bill requires the transferee to give the transferor a reasonable time to repair or replace the goods. May I ask: what would be considered a "reasonable" time? Is there a definition of how long is that reasonable time?

Third, Sir, can a retailer opt out of this legislation by contracting out of it? Thus, can a retailer place in his conditions for sale that goods sold cannot be refunded or exchanged? We see this term quite often whenever the goods are sold pursuant to some "mid-year sale" or "clearance sale" or "closing down sale". Thus, if a consumer buys a "lemon" product during a mid-year sale, would he be deprived of the protection of this law if the retailer contracts out of the law in his sale terms or by big bright label saying that the item is a "sale item"?

Finally, Sir, can the transferee or consumer ask for costs or compensation under section 12C(2) for wasting time and transport expenses when he has to send the product for repair more than once? This will ensure that retailers of products effect quick exchange for a defective product. Otherwise they will face a claim for compensation. A retailer can also insist that the transferee make multiple trips to the service centre just to have the defective item repaired again and again. Sir, this would be a waste of time and travelling expenses for the transferee or the consumer. Thus, in the case of my defective mobile telephone, the cost of making three trips to the service centre, including the parking charges and the four to five hours of wasted time waiting for the phone to be repaired, eventually cost me more than the price which I paid for the phone. I would be grateful to hear the Minister's clarifications. I support the Bill and on behalf of the consumers in Singapore, I urge Members of this House to also support the Bill.

Mr Speaker: Mr Lim, while I very much sympathise with your phone problem, I am not sure whether any retailer will be selling you a phone after that speech. On a more serious note, if I could ask Members if they are going to use the VGA plug-in for the LCD display for their smartphones, you might want to take the phone off line before you plug it in so that you do not have to answer your calls or read your SMS messages throughout.

3.37 pm

Mr Gerald Giam Yean Song (Non-Constituency Member): Mr Speaker, I welcome the amendments to the Consumer Protection (Fair Trading) Act and the Hire Purchase Act to include so-called Lemon Law provisions. This is a progressive step to bring Singapore's consumer protection regime up to speed with other developed countries like Japan, the US, Canada, Australia, and the EU. If executed well, the Lemon Law could help weed out poor practices by a minority of retailers in Singapore, and reward those with good practices. This could lead to improved customer service and greater customer satisfaction.

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In addition, as poor retail practices are weeded out, it will inspire more confidence among both local consumers and the millions of tourists who arrive at our shores each year to shop. They will be more at ease to buy goods here, without worrying about the limited recourse should the goods turn out to be defective. In turn, we could see fewer tourists leaving Singapore with a bad taste in their mouth because of unpleasant shopping experiences.

Sir, I have a few questions about the proposed amendments as well as some suggestions on how the execution of the Lemon Law could better achieve its objective of protecting consumers. Section 12C states the transferee may require the transferor to repair or replace the goods. Can the consumer ask for replacement without attempting a repair? This will make it much more convenient for the consumer and he will not need to make multiple trips to the service centre.

The proposed section 12D(3) states that if the customer rescinds the contract, any reimbursement due to him may be reduced to take into account the use he has had of the goods since they were delivered to him. I note that based on existing common law, the court has sometimes decided not to make any deduction for use because of the inconvenience which the buyer has already suffered in having to deal with the defective goods.

This being the case, may I ask the Minister of State: what will be the basis for calculating this deduction of quantum of reimbursement? Will the deduction be for only the duration of use until the first repair attempt, or for the entire duration of the product has been in the customer's possession even if it included multiple failed repair attempts in between?

The Lemon Laws in many states in the US specify that the reduction of reimbursement is for the consumers' use of the vehicle only until the first repair attempt because it recognises that the consumers continued use of the "lemon" is not a valued benefit to them.

I also have concerns about whether a minority of customers might abuse the Lemon Law to make dishonest claims. This can lead to an increase in the retailers' costs, which could get passed on to other customers. Does the Ministry intend to introduce any measures, including punitive measures, to discourage frivolous customer claims? Could the Minister of State also explain what the rationale was for specifying the six-month period after the purchase of the goods, during which the customer can exercise his rights under this law? Why six months and not more or less?

Sir, I now come to the implementation of the Lemon Law. I believe much would need to be done to educate customers about their rights under the Lemon Law. Without adequate public education, consumers may not reap the full benefits of the amended law.

There could be several situations where consumers' lack of understanding of their rights may disadvantage them when dealing with savvy retailers. The first is a situation that may arise when retailers get their customers to sign away their rights through a contract. At the point of the retail transaction, customers often do not have the time to read through the fine print before signing and completing the purchase. Section 13 of the Act states that the provisions of the Act shall prevail notwithstanding any agreement to the contrary. However, if the customer were to return to the retailer and request repairs, replacements or a refund, the retailer may simply pull out the contract and turn down the request. If the customer is not aware of his rights under section 13, he would naturally assume that since he had signed the contract, he has no further recourse.

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Secondly, some consumers may have difficulty distinguishing between a manufacturer's warranty and their right under the Lemon Law. Many goods sold in Singapore, especially consumer electronic goods, come with a warranty from the manufacturer. The retailer requires the consumer to approach the manufacturer directly to rectify any defects within the warranty period.

However, if the manufacturer does not fulfil its agreements under the warranty, or the warranty is shorter than six months, the consumer may not be aware that he still has the right to go to the retailer to request remedies for the defective product.

It is important for consumers to be informed about the avenues available to them if they are unsuccessful in claiming remedies from retailers of the defective goods. Since many shoppers in Singapore are tourists, it may be ineffective to run expensive television advertisement campaigns. Instead, clear signs could be required to be displayed at all retail outlets highlighting a telephone hotline and a website that shoppers can call or visit to learn about their rights as consumers, and the avenues for recourse under the Lemon Law. The website could include a "Frequently Asked Questions" section to clarify consumers' and retailers' rights and responsibilities in plain English and with appropriate translations.

In addition, the relevant authority could require that the hotline be printed on the receipts issued by retailers, for shoppers' easy reference. Retailers too should be educated about their obligations under the amended law. If not, many of them might continue with their old practices and cause much confusion and frustration among consumers.

In conclusion, I believe the amendments tilt the balance more in favour of consumers and this will lead to Singapore becoming a more attractive retail destination. However, the situation should also be closely monitored to ensure that this does not inadvertently lead to higher business costs, which could get passed on to the very consumers that this Bill seeks to protect. Mr Speaker, with that, I support the Bill.

3.44 pm

Mr Hri Kumar Nair (Bishan-Toa Payoh): Mr Speaker, I support the Bill. I think it is useful to remember why we have the Consumer Protection Act in the first place. The Common Law could not adequately address the imbalance between the might and financial power of commercial enterprises and the vulnerabilities of the ordinary consumers, particularly when dealing with increasing complexities of modern trade and products. The Government therefore has to intervene to give consumers more rights and provide adequate and practical remedies when those rights are infringed.

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The new Lemon Law proposal increases consumer rights and is therefore good to provide remedies to consumers should their purchases fail to conform to an applicable contract at the time of delivery including terms implied by statutes such as the Sale of Goods Act. Consumers are entitled to require retailers to repair or replace defective goods or require the retailer to reduce the price of the goods, or the consumer can cancel the purchase and get their money back.

The key provision that makes this right stronger is the proposed section 12(b)(iii) which provides that goods, which do not conform to the applicable contract at any time within six months from the date of delivery, is presumed not to have so conformed at the date of delivery. In effect, it gives consumers a six-month trial period. This enhanced protection comes at a timely juncture. CASE, in their media release supporting the proposed amendments, noted there had been an increasing trend of cases relating to defective products from 1,410 cases in 2007 to 1,793 cases in 2011. Hopefully, these amendments will reverse that trend by encouraging better retail practices.

Having said that, I am concerned about some practical issues which may undermine the effectiveness of the proposed Lemon Law. I would like to make four points. First, the proposed law only applies when the product fails to conform to the, I quote, "applicable contract". I would be grateful if the Minister or Minister of State could clarify what that means. For example, if the product is sold with a lengthy list of microscopic terms and conditions, waivers and exclusions, would that be part of the applicable contract? If so, that could defeat or dilute the protection the provision seeks to give, particularly when the terms seek to restrict or qualify the performance of the product.

Second, the provisions do not specify the exact form the refunds must take if the consumer requests one. Will the retailer be entitled, for example, to provide a consumer with a voucher or must they pay cash? When it comes to replacements, must the retailer provide a brand new product or will they be allowed to provide the customer with a refurbished product or display item? Leaving this uncertain may result in disputes and disappointments.

Thirdly, while the retailer is not allowed to contract out of the provisions of the act, this does not mean that some retailers will not try. As reported in The Straits Times on 16 February 2012, in anticipation of the amendments, one retailer is instructing its staff to record agreements where consumers are willing to give up a warranty in exchange for a better price. Consumers will be none the wiser as to whether such deals are allowed. That same would apply to goods on sale. Not knowing your rights is as good as not having those rights at all. More must be done to educate retailers and consumers about their rights and obligations arising from these amendments. May I ask the Minister of State what he plans to do to educate the public on these rights? He says there is going to be a "Lemon Law education campaign". Could he give this House some details on that campaign? But, I think, despite all the campaigns and the education, people will forget. So can I ask the Minister of State, will there be an obligation imposed on retailers to inform customers of their rights at the point of purchase, which is really the most important time?

Finally, for disputes which cannot be resolved, the parties may try mediation before CASE, before heading to the courts, most likely the Small Claims Tribunal. This could take time and could cost more than the item, which is the subject of the dispute. Further, the more inconvenient the process, the more likely consumers will be deterred from prosecuting their complaints even when there are genuine complaints, or even encourage retailers to be as difficult as possible so as to discourage the customer. Could we not simplify the process by giving a body like CASE the power to make awards for claims not exceeding a certain threshold? This, I suspect, would resolve the majority of cases and reduce time and costs substantially. There is a precedent for this in banking disputes where customer can turn to Financial Industry Disputes Resolution Centre (FIDReC) to adjudicate claims not exceeding $50,000. And as the Minister of State would know, following the Lehman crisis, many customers turned to FIDReC for adjudication instead of to the courts and many cases were resolved quickly and with minimal costs. There should be a similar facility for consumer disputes. This body could also maintain a database of awards made which should bring to light any errant retailer guilty of multiple violations. In this regard, would the Minister of State also clarify whether any action will be taken against the recalcitrant retailers?

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Sir, I support the Government's move to help consumers. However, I hope consumers and retailers will turn to these provisions as a last resort. Ideally, consumers and retailers should come to an amicable settlement when there is fault in any product. As reported in the The Straits Times on 29 February, and I quote, "In the US and the United Kingdom, many retailers do more than it is required by Lemon Law. They give exchanges, no questions asked, sometimes on the spot. This keeps customers happy and removes the hassle of dealing with frivolous complaints. Far from encouraging spurious complaints, retailers say freely given exchanges lead to a fall in the number of unreasonable complaints, they credit this to shopper trust." That is the ideal we should aspire to.

At the end of the day, retailers should cultivate goodwill and loyalty through good service. The retailers' real fear should not be Lemon Laws or other forms of consumer protection, but the knowledge that their customers have the ultimate remedy of going to their competitors. And on that regard – a word of advice to Mr Lim Biow Chuan – if the phone does not work, perhaps it is time to go to a different provider.

3.50 pm

Mr Yee Jenn Jong: Mr Speaker, Sir, many I spoke with welcome this amendment because of prior bad experience. Like them and Mr Lim Biow Chuan, I had, at some point in time, purchased products that failed to work soon after the purchase was made. Many retailers in Singapore do not have a "no questions asked" refund policy. This Lemon Law will force retailers to rethink the business model they use to transact with consumers.

The amendments now make provisions that if a product is found defective within six months of delivery, the customer has the right to demand the seller make repair or replacement within a reasonable time and without causing significant inconvenience to the consumer, or the consumer can keep the defective product and be given an agreed discount or return the product for a total refund. Now, there are four areas I wish to highlight as potential concern areas in the execution of the Bill for which I will be grateful for the Minister of State's clarification or assurances.

The first is what constitutes a refund? Like Mr Hri Kumar, I wondered if retailers will attempt to get around the compensation issue by offering or contracting in-house vouchers of the same value as the defective products to the customers as compensation. How do we prevent retailers from such attempts to dilute the consumers' rights?

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The second is a retailer may sign a contract with the customer to state that the product is, I quote, "as is" due to special pricing, or promotion, or due to the nature of that particular product with no refund or exchange allowed. Section 13 of the existing Act seems clear enough that it bars sellers and buyers from contracting out of a refund for other considerations such as a lower price. However, many retailers and consumers may not know of this provision. Retailers may attempt creative ways to contract themselves out of the provision in this Act, especially during the initial implementation stage. A lot of monitoring and education need to be done. The Minister of State has spoken about "as is" products. How do retailers now have to highlight specific defects in specially-priced products as stated clearly in their contracts and advertising to make sure they stay within the law?

Third, the amendment covers physical products. I understand a big area of consumer complaints is regarding services such as packages offering services like spa services. I am citing this as an example but I do not wish to generalise that such packages are bad. One may purchase a package only to find that the centre is perpetually overbooked and you can hardly get a chance to use your package. Or if you sign up for some miracle treatment to restore, say, hair, only to find that it does not work after six months of faithfully trying the service. What recourse avenues are there for consumers under the current law now? I appreciate that the Ministry would need time to work out this current amendment on dealing with physical products. I trust it will cover services more comprehensively in the future amendment of the Act.

Fourth, I understand it will be difficult to cover online purchases as online shops are likely to be outside of our jurisdiction, or we may not even be able to identify and locate these online shops. Nevertheless, online shops registered in Singapore should have to abide by these rules. I would like to hear from the Minister of State his views on online purchases.

Sir, I support the Bill as it is a move in the right directions towards the type of shopping experience we get in first world countries. The execution must be managed carefully to ensure that retailers and consumers are adequately educated so that both groups are fully aware of their rights and obligations under this amendment. We should be mindful that Singapore is a cosmopolitan city with consumers, retail frontline staff and even retail owners coming from a diversity of international backgrounds. Non-Singaporeans may be used to the retail practices in their native countries. A good engagement programme with different stakeholders in the implementation is critical to its success. Can the Minister of State elaborate on the steps which the Ministry will take to educate retailers and consumers in conjunction with the implementation?

We have just finished the Budget debate which had a lot of focus on SMEs. The bulk of our retailers are SMEs. The larger retailers will have the better resources to get themselves acquainted to and cope with the changes. Smaller retailers may find the changes difficult to understand and deal with. Retailers should also be mindful that they need to work out their own arrangements with product manufacturers to ensure that they are not stuck with an untenable position when servicing the customers. They will need to factor for refunds and exchanges. Some retailers may now turn conservation about carrying lower-priced products that may not be built to last even if their consumers are willing to buy these because the consumers themselves are highly price conscious. This will lead to changes in our retail model over the next few years. I hope MTI can extend good support to the SME retailers to ease them in the implementation. Engaging in partnership with organisations such as the Singapore Retailers Association will be helpful. I hope, too, that there will be a balanced approach in the implementation so that we do not unnecessarily put genuinely good but small retailers out of business. I trust that if we execute this amendment well, it will be a more pleasant and reassuring shopping experience for us all.

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3.57 pm

Mr Ang Wei Neng (Jurong): Mr Speaker, Sir, please allow me to speak in Mandarin. ( In Mandarin ): [Please refer to Pg 2523-2524 for Vernacular Speeches.] Mr Speaker, thank you for allowing me to join this debate. The Consumer Protection (Fair Trading) Act, internationally known as the "Lemon Law", has been anticipated for a long time. Many residents ask me why the Lemon Law cannot come into force immediately. I explained to them, Amendment Bills can only come into force after the Third Reading in Parliament. More importantly, retailers need time to adjust, and the Government also need to educate the public, to prevent any misunderstanding and abuse of the law.

Lemon Law is very common in the US, UK and other European countries. In Singapore, it is still a new concept. People will have many queries. I hope MTI can explain to us in detail.

First, we know that consumers do not have as much information on the quality of the product as the retailer. We are concerned that some retailers will take advantage of the buyer's ignorance and ask him, at the point of payment, to voluntarily relinquish the right to have the defective merchandise replaced or refunded. When the retailer is having a promotion or sale, buyers are mostly likely to be tricked when they try to save a few dollars. I hope that MTI will take note of this.

Another issue is that some merchants will only give cash vouchers, not cash, to consumers who ask for refunds. There are many conditions associated with a cash voucher, the consumer can only buy the same type of products in the same shop. The validity period is also limited. Does the Lemon Law stipulate that consumers have the right to ask for a cash refund?

In addition, the Bill did not state clearly the quality of the replacement product. Many people worry that the replacement will not be much better than the original defective product. I suggest the Law stipulates that if the consumer bought a new product, the replacement should also be new. If what he bought is a second-hand product, then the replacement can be second-hand. However, the quality must be the same.

As for the replacement product, does it come with a six-month "lemon" protection period? Or is it a case where once the retailer gives a replacement, he is no longer bound by any liabilities stipulated under the "lemon" law?

A fair approach would be to calculate the period from the date the first merchandise was sold and add six months. If the replacement is also found to be flawed within the six months, then I think the buyer is entitled to ask for a full refund.

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Although we advise consumers to compare products from different merchants, sometimes the products are still not up to expectation. If the merchant does not abide by the Lemon Law, consumers will suffer more. Therefore, I hope the Government can simplify the appeal process for consumers, so consumers will not suffer further. I also hope the Government can establish an enforcement team, to conduct raids or undisclosed investigations to see whether merchants abide by the Lemon Law.

Of course, just as there are unlawful retailers, there will also be unreasonable consumers. If a few buyers make frequent unreasonable claims or repeatedly ask for refunds, I suggest MTI or CASE put them on a blacklist to alert the merchants. This will also allay merchants' concern that the law could be abused.

Lastly, I urge MTI or CASE to publicise the Lemon Law in a manner that is simple and easy to understand, so that the elderly and the less educated can understands the Lemon Law and know how to safeguard their consumer rights. We can then move closer towards the ideal world of mutual trust. We do not want to see consumers feeling unhappy even after the law comes into effect. I support this Amendment Bill.

4.02 pm

Mr Patrick Tay Teck Guan (Nee Soon): Mr Speaker, Sir, I rise in support of the Bill that will help to protect consumer rights better and ensure better equity in retail transactions, in the case of a defective product. This Bill will also see retailers and suppliers of goods taking a more responsible attitude in the quality of their merchandise. All these will culminate in a better reputation for Singapore as a retail hub in the region.

I would now like to touch on several issues and ambiguities that are not fully covered in the Bill. To begin with, the definition of what makes a good defective is very much left open to interpretation. The seller and buyer will surely take a different view on this and claims for refunds will surely take time to settle without a clear definition even though the burden of proof now lies with the seller.

For second-hand goods, it will be an even more tedious process in establishing right and wrong. Take for example, the purchase of a second-hand car. A few months later, after the purchase, problems may start erupting and the new owner has to spend monies in replacing the air-conditioning system, the lights, the brake pumps and even the brake pads.

At the point of purchase, one would never have imagined that one has to fork out so much more since all these malfunctioning parts to be replaced had never been mentioned in the first place. The worst thing is that they all happened progressively in which no physical inspection can help to identify. In the case of the car air-conditioning, the new owner may just be told that it was a bit weak and there were no further explanations. In the new Law, I suppose you would be able to ask for a replacement car, or similar make, or model, or to receive a further discount?

However, I think it is a weak case. First, the person accepted the fact that the car is having a weaker air-conditioning system and, second, a second-hand car would surely have come under prolonged use and its parts are more liable to break down or be worn out. I am not sure how realistic it is to ask the second-hand car dealer to guarantee that all the parts be in tip-top condition. Third, and most importantly, the car is still in good driving condition. Would it be regarded as a defective product since the car can still be driven?

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For big ticket items like a car, it would be far better to state specifically in legal annexes what would be the conditions of exchange and how the refund or discount policy be like. To place all baskets of goods in the same coverage, the Law seems to take a simplistic approach. It is more likely for the second-hand car owner to settle repairs first rather than wait for a car of a similar make, model and mileage to be exchanged. In practicality, it probably will not happen at all.

The simplicity of the laws of exchange without considering the nature of products sold is another shortcoming. I worry for sellers who may pay a high rate of return and refunds. This will directly add on to the costs for the businesses and impact them financially. Taking the example of an apparel, this is probably one difficult category of product to establish the nature of defects for it does not just concern the size and fitting but also comfort and aesthetics. An apparel can shrink after repeated washing and hence the size does not fit or it becomes tighter. The colours on our shirts and dresses can also fade after sometime. Will all these therefore fit into a "defective" product?

The seller can argue that perhaps the wrong washing method is deployed and hence caused the defect. Consumer can continue to insist that this is not the case. How would the tribunal or in anyway, some dispute resolution measure be able to establish the process of law in this case? In a most ludicrous situation, the consumer may have added on to their waistline causing their clothes not to fit anymore. Would this require for sellers to have an exchange of goods when these clothes are brought back to them within six months' of purchase? Should the seller then not record every single customer and every single waistline to ensure the veracity of the purchase?

I am not saying that all our consumers are unreasonable. In fact, unreasonable customers would be a minority. However, from this simple example, we can see the challenges in which the Law can be exercised and be potentially abused. Through the earlier two examples other than the ambiguities of what constitutes a defect, it is clear that another lacuna of the Bill is the one-size-fits-all approach in covering exchanges, discounts and refunds for all goods.

On the point of equity, it may be useful to consider different time periods for different categories of goods. For example, defects in a car may take more than six months to manifest as compared to a defect in an apparel. Conversely, a six months' period for an apparel may be too long as the fabric is more prone to wear and tear and damage.

The other area of ambiguity is on what really constitutes the proper exchange and refund of defective goods. Some retailers may just replace the product with a refurbished product rather than a new product that works. Such a refurbished product will usually be sold at a discounted price. So, the point of equity cannot be taken as the same.

What safeguards are there in place in the Law to stipulate how an unscrupulous retailer would be held responsible if they resort to pass off used products as new replacement products? I am shocked at a recent case when one customer of a mobile company received a used phone in the context of strangers in the inbox when this phone was passed off as a new phone.

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The broad wording of the Law also seems to suggest that the retailer would have the discretion to provide an exchange, refund, discount, or even to send the defective product repeatedly to the service centre rather than to meet the customer's specific request.

The implementation of the new Law also has to take into account new shopping trends such as online shopping. A recent article in The Straits Times on 3 March 2012 highlighted how more and more people have taken to shop online for their furniture. So what happens when their furniture that they have ordered and paid for by their credit cards is not the same as the one ordered or even delivered? Will the new Law be able to extend its reach even beyond our borders? Many of the online furniture stalls may be based overseas and even the local ones will have their manufacturers and suppliers abroad. It is difficult to see how replacement or refund can be sought readily when the seller cannot be located in Singapore. If there is a differentiated treatment based on whether the seller is local or foreign, will the Law then be fair to our local sellers?

On online payment itself, I thought there is a critical need to build safeguard mechanisms online to deter mistaken purchases. This is because the product delivered or received may not be fully representative of what is seen online or the presupposed functions are not even there. Sometimes, it can even be the wrong click of the computer mouse. I have personal experience of online purchases, once made, are extremely difficult and near to impossible to reverse and seek a refund. The process of filling in appeal letters to banks to rescind online payment is usually tedious and onerous.

Many of the online purchases may not feature physical goods, sometimes, but services instead. The new Law would not be able to cover this area since the definition is strictly on physical goods. There are a broad range of services that consumers purchase which will not be covered in this new Law.

I am also fairly concerned about the spike in complaints about online group discount purchases. How can we ensure that retailers deliver their end of the bargain? I am of the opinion that stronger measures need to be put in place to protect unknowing customers who may have purchased products at the spur of moment, attracted by the price discount alone.

Sir, the introduction of the Lemon Law, to me, is just a start in educating consumers on their rights and how to exercise them. The scepticism among consumers is understandable as the new Law will not remove all the lemons. It will be far better to promote a retail environment where exchanges are made without questions and on the spot and also, a consumer culture which thrives on information sharing. This is already happening in the United States, Japan and Europe. I hope there will be a day where the Law will not be needed to make the buyer and seller pleased that the transaction has been made.

Sir, notwithstanding, I am happy that we have made a significant and steady progress with consumer protection. Seriously, I hope this Lemon Law will not sour the buyer and seller relationship. I think, at the end of the day, our desired outcome is not for the buyers and sellers to throw lemons at each other but that both parties can enjoy the lemonade that is squeezed from the lemon. With that, I support the Bill.

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4.11 pm

Mr Zainal Sapari (Pasir Ris-Punggol): Mr Speaker, thank you for allowing me to join this debate. I welcome the Lemon Law. To tell you the truth, the first time I heard about Lemon Laws was when I was watching the movie "Cars 2" where there was a group of cars, one group, they would call themselves "Lemons" where they were defective cars and the other cars were the better cars. That was when I actually checked out what was the meaning of the lemons and came to know about lemons being defective goods. I believe I might not be alone in not knowing what is a Lemon Law. So, I support the call for public education to know what the Lemon Law is all about.

I think this is a significant milestone for the protection of consumer rights. However, I noticed the proposed amendment covers only the purchases of goods including perishable products. In many countries, the Lemon Laws actually cover the purchases of pets. They call it the Puppy Lemon Law. So, I would like to propose for the Bill to also include provision for the purchases of pets. I also want to declare myself as being the owner of two pets.

However, in introducing the Lemon Laws for pets, I would like to caution against possible abuses. We have heard cases where the purchasers of pets sometimes, out of being impulsive, buy the pet at the spur of the moment and should they change their mind, I think there must be certain safeguards to prevent people from causing harm to the animals, hoping that they could claim back the purchases of the pets by causing harm to the animals. I hope sufficient safeguards will be introduced should the Ministry consider to include the purchases of pets under the Lemon Law.

4.14 pm

Mr Teo Ser Luck: Mr Speaker, Sir, let me first thank all the Members who have spoken and raised some lemon questions or questions relating to the Lemon Law. There are a lot of lemons around. As Members can see, the questions are so varied and diverse. As such, first of all, the Law is not going to be very prescriptive. From the legal perspective, we can pass the Law and then try to explain and interpret the Law and educate consumers. But on the ground, the law is actually practised in such a way where it gives a win-win situation or position for both the consumer and business.

I have been on both sides, as a consumer who bought lemons and, also, as a customer service representative early in my career when I worked for multinational companies with customer service policies that are very simple. For the smaller company, they were smaller but the customer policies are very detailed in order to reduce costs. Both these companies practise customer service and, I would say, that returns policies are based on very different kind of philosophies and ideals.

I would say that may be the company size is different and some with resources and some without, but the ones that have good customer service practices and the ones that retain customer loyalty and where the customers keep coming back are the ones with the least number of rules or guidelines for people like us, who are customer service officers who had to deal with customers. The broad guideline was: whenever a customer approaches you and you engage them, and you look at the product, if there are any defects or not, always give the benefit of the doubt and exchange it if you can, if you have the product or the stock. If you do not have the same model, offer alternatives. That was how it was practised. We did not go to the part where there was cash refund because, at that time, we issued vouchers. At that time, we did not know about the existence of Sale of Goods Act nor was there any Lemon Law so many years ago.

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Whereas, on the other hand, I also worked part-time in this company's customer service unit but it had strict rules. We would get supervised for every single transaction that we approved or disapproved. It was always down to the dollars and cents. As you can see, the customers that had a very good customer experience would keep coming back and bought more products. That is the practice we look for. That is what we hope the Lemon Law can act as a deterrent law to filter out the retailers that do not have the best practices. We want to make sure that retailers maintain some good practice, give a good customer experience. That will be good for the retail sector, the business sector, also for the companies that deal with consumers directly every day. It lifts Singapore up with good reputation and goodwill. At the end of the day for consumers and businesses, there are just a few important objectives: quality of the product is very important, the goodwill built between the two parties is very important and we want to retain the customer loyalty and make sure customers will come back and even buy more products. This is extremely important. Some companies do their sales or market their goods not just based on quality of products but on a customer service approach. You can tell that some of them practise the principle of money-back guarantee, no questions asked. Some of these promotional campaigns are actually quite common, nowadays, because the companies want to show that they keep the customers at the very top of their priority.

So, let me try to address some of the questions and if I cannot answer all of them, as there are so many of them and so diverse, I will also come back to you separately. But let me start with some of the points of clarification. Mr Lim Biow Chuan, Mr Ang Wei Neng and Mr Yee Jenn Jong who have asked if the retailers' obligation under the Lemon Law can be contracted out. The retailer cannot contract out his obligations under the Law. As I have spoken in my earlier speech that, even under existing laws, the retailer cannot deny the consumer his rights to remedies by stipulating that it is a sale, display or discounted item that cannot be refunded or exchanged. Retailers should document any defects and product limitations on the sales contract, invoice or packaging. And if these defects and limitations are made clear to the consumer at the point of sale, retailers will not be held liable for them but it has to be very specific and pinpoint. I will also address this issue later in my speech.

Mr Lim also asked if the consumer can ask for compensation for time and expenses if he is asked to send the defective product for multiple repairs. Under the proposed Law, the retailer must bear any necessary costs incurred in providing repair, including the cost of any labour, materials, postage while delivering the goods for repair. And if the retailer is unable to provide the repairs within a reasonable time and without causing significant inconvenience to consumer, consumer may demand an alternative remedy, meaning a replacement, a reduction in price or a refund.

Mr Gerald Giam has enquired about how deduction for usage by the consumer is calculated in the refund. The court will have the discretion to determine the appropriate deduction, depending on the facts of each case. As Mr Giam has rightly pointed out, based on existing common law, the court has sometimes refused to make any deduction for use because of the inconveniences which the buyer has already suffered in having to deal with the defective goods. This has to be kept open because it really has to depend on the type of goods and the nature of the goods, the type of purchases and how it was purchased at the point in time and we have to keep it and leave it more open, flexible and dynamic rather than prescriptive because it may not be able to be applied across the board. There is case law where the court determined on the spot how the transaction was done, whether the goods that were purchased and used, whether there was wear and tear, whether there was inconvenience caused, and whether there was cost incurred in delivering to and fro. All these would have to be considered on a case-by-case basis.

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On whether vouchers are considered acceptable refunds, the answer is "no". The partial or full refund should be in cash. The consumer may decline to accept vouchers. In my earlier example when I mentioned about my own experience about exchanging those products, we never had to deal with cash. Because what we want to do was to encourage the customers to continue to use the product from the same company, use the same brand and not go to the competition. That was why we would offer vouchers and we would propose alternative products for the customer because we want to make sure that we keep the customer within our product. If not, they would change the brand or change to another kind of product, we think, we would lose the customer. Under the Law, it has to be in cash. In practice it could be very different. But the Law protects the consumer.

On Mr Hri Kumar's request for clarification of whether terms and conditions in fine print would form part of the contract for determining conformity to contract, the answer is "yes". However, these terms and conditions cannot be used to allow retailers to contract out of their obligations under the Law or to deny consumers their rights to remedies, and in addition, where the other Acts do apply.

The Unfair Contract Terms Act does not allow retailers to contract out the implied terms of the sales contract under the Sale of Goods Act, including the term to conform to description and to be of satisfactory quality and fitness for purpose. The court can also grant relief to a consumer under the Consumer Protection Fair Trading Act for unfair practices and this will include taking advantage of a consumer by including in an agreement terms or conditions that are harsh or oppressive or extensively one-sided so as to be unconscionable and using small print to conceal a material fact from the consumer or to mislead the consumer as to the material fact in connection with the business of supply of goods and services. So, if there is intent to hide, intent not to show the true facts, then the business or the retailer will be liable. So, there is the Act and there is the law to protect the consumer.

Mr Gerald Giam enquired about how the six-month rebuttable presumption is derived. Under existing laws, such as the Sales of Goods Act, the buyer can already reject the goods and claim a refund if the goods do not conform to the contract. However, the consumer can only do so within a reasonable period which is actually not defined. That is exactly why the Lemon Law regime provides a six-month time frame in which the defect that occurs is presumed to have existed at the time of delivery unless the seller can prove otherwise. So, in this case, a consumer can return, reject but the retailer has to prove. So, the burden of proof is with the seller. If the seller cannot prove that the defect did not exist at time of delivery, he is obligated to provide a remedy.

This six-month period is consistent with that set in the lemon laws of the UK and the EU. We are learning and following how lemon laws are practised internationally, and so, we have adopted this six-month period. Whether it is too long or too short, it is hard to tell. As it evolves, it will depend on the context, it will depend on the environment in Singapore. But we think that the six-month period is not too long such that it makes it difficult for a seller to prove that the defect was not present at the time of delivery. But, really, I would say that on the ground, it depends on the product, depends on how it was transacted as well and the practices between the seller and the buyer. A lot of these arrangements in the past tend to be resolved by their own arrangements. Some of these laws that we put in place even if they say six months, I believe sometimes it is resolved within the six months.

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Mr Ang Wei Neng has asked if the six-month rebuttable presumption period is renewed each time the consumer obtains a replacement. This six months' reversed burden of proof on the retailer cannot be renewed with each replacement. However, the Lemon Law provisions for remedies of repair, replacement, discount or refund will still apply beyond this six-month period. But the consumer will have to prove that the replacement provided did not conform to the contract.

Beyond clarifications, there were also questions on whether the law can be more specific. And there was a question asked by Mr Patrick Tay. In my earlier speech I have explained why we should not make the Law more specific by stipulating terms and conditions for the particular goods. And given the diversity of goods in the market, doing so is not practical and I have explained that the practice can sometimes be different and it will make the Law complicated in application. In fact, it may or it may not help retailers since this Law does protect consumers. And it will also remove the flexibility for both retailer and consumer to work out mutually acceptable arrangements. Our Law must also be adaptable to the new goods that come on to the market. It will not be possible to change the Law every time a new product is launched. However, we understand the need for guidelines to provide greater clarity to businesses and consumers and we have distributed advisories to various trade associations highlighting good business practices, case studies on claims for various types of goods. We are going to work with CASE to prepare consumer guides to highlight what we consider appropriate and reasonable claims under the Lemon Law.

On whether the new Law will lead to abuse by consumers resulting in increased costs, businesses and goods retailers already have in place guarantees and warranties and their own returns policies. In fact, some of the retailers with good practices and also have great customer retention and loyalty, have returns policies and customer service polices that are even more stringent than the Lemon Law. There are also existing remedies under other legislations such as the Sale of Goods Act or the Common Law. The proposed amendments help to enhance this market deficiency, making more explicit the time frame that the burden of proof falls on the retailer, and by providing more options for recourse. While the consumer can use the proposed Law to seek recourse from the retailer, the retailer can offer to repair the product first before providing a replacement or even a discount or refund.

Consumers are not entitled to a remedy if they caused the fault, for example, by misusing the goods, wear and tear, or trying to repair themselves, or getting it repaired by unauthorised retailers. The remedies are also not available if the consumer knew about the fault before they bought the goods. Or simply changed their mind and no longer want the item. With the Lemon Law, within these six months, the retailer must prove those facts.

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As Mr Lim Biow Chuan has said earlier, established retailers with existing money-back guarantees have indicated that consumer abuses are not frequent and most reputed retailers are already giving refunds or exchanges to make their customers happy. But, of course, there are cases that still happen. This Law, in some way or another, has to be explained effectively to both sides, both the retailers and sellers, and see how they implement the practice. But, at the end of the day, it is important that the retailers must understand that any mutually acceptable agreement must be beneficial for themselves and also must get the buy-in from the consumers.

Sir, I have spoken on whether replacement needs to be brand new. The replacement should conform to contract that is to be of the quality, make, model and condition that is expected. Wear and tear due to usage will be considered. If the consumer is not satisfied with the replacement, he could ask for other remedies such as a reduction in price, or return the product for a refund.

And to answer Mr Lim Biow Chuan's question of what constitutes a reasonable time before a consumer can seek an alternative remedy: it is not practical to prescribe a time frame definitely, given the diversity of goods. We cannot simply stipulate one time and then apply it across the board because the range of defects is also different. The Law states that this is to be determined by the nature of goods and the purpose of which the goods were acquired and the court will interpret the provisions accordingly. The industry association may also adopt codes or guidance for their members as appropriate dispute resolution practices. Industry standards and guidelines may also indirectly influence the court's views too.

Let me move on to the question of coverage of the proposed legislation. Both Mr Yee Jenn Jong and Mr Patrick Tay have asked why services such as spas and real estates and hair care and time share are not included. In my earlier speech, I mentioned that not including services and real property is consistent with lemon laws in other jurisdictions. Services are not covered as the remedies under the Lemon Law regime are tailored for goods. They are generally inappropriate for services because, sometimes, implementation will be difficult under the Law. For example, I am not sure how to replace the hair that is still not growing. Maybe they will give you a wig. I am not sure if that is the best replacement, but sometimes, it is difficult to say how does a company repair a service or a spa treatment. Moreover, for property including HDB flats, there is already existing legislation governing the sale and purchase of new or uncompleted properties, such as the Housing Developers Control and Licensing Act and the Sale of Commercial Properties Act which provides for one-year defects liability period and beyond the one-year defects liability period, purchasers can still take civil action against the developer for latent defects on grounds of negligence or breach of contract.

Specifically, for time share and spa, consumers are already protected under the Consumer Protection (Fair Trading) Act which contained specific provisions against pressure selling, which is a common complaint. We have also recently strengthened the time shares specific provisions in the Act, such as extending the mandatory cooling-off period from three to five days and introducing a 60-day refund period for contracts cancelled within the cooling-off period. CASE has proposed further amendments to it and we are going to conduct a public consultation together with CASE later this year.

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As for online transactions, they are covered under the Lemon Law. As in other jurisdictions such as UK and the EU, the Lemon Law does not distinguish between local or foreign online traders. Generally, Singapore law applies if the contract stipulates it as the "governing law of the contract" or if the contract is concluded in Singapore. However, it may not be possible to enforce that judgement against those overseas traders if they have no presence here. So this is where consumer education comes into play and it is very critical that you make a choice and when you buy things online, you must know who you are buying from and whether there is an appropriate track record, the track record that can be reliable and you know that the physical presence is there. Different ways of making that judgement, but consumers would have to make informed decisions.

The issue of enforcement against overseas parties is a practical jurisdictional issue which is not unique to lemon laws. For group online purchases which failed to deliver, after payment was made, the consumer may have recourse under contract law as well as under the Consumer Protection Fair Trading Act. If there was fraudulent intent, the police may be able to take action for offences under the Penal Code. Lemon laws are not designed to address the issue of mistaken online transactions. However, the Electronic Transactions Act allows a person to withdraw input errors when transacting online if he did not have an opportunity to correct the error. So, that is the Electronic Transactions Act that provides that opportunity.

Let me address some issues on operations and education. On Mr Hri Kumar's question on whether CASE is given powers to award claims so that consumers need not take a more expensive route of going to court, currently, the Act does not allow such powers to CASE. We can discuss with CASE, review what is possible to make it more effective as we evolve, because the laws have not been implemented yet. It takes a while. At this point in time till September when it is implemented, we will focus on education and trying to educate and get public feedback and consultation as well just to make sure that there is good understanding. So that would be the focus.

CASE will provide mediation services to resolve disputes between retailers and consumers and they will guide the consumers through if, let us say, consumer wants to apply the Lemon Law to some of their transactions. And, as I understand from CASE, if you sign up as a CASE member, this whole process of handholding the consumer is free of charge. Yes.

I will also like to point out that the cost of going to the Small Claims Tribunal – the charges to the consumers range from $10 to $20, depending on the claims amount. The Small Claims Tribunal provides a speedy, low-cost forum for the resolution of disputes arising from claims not exceeding $10,000 or $20,000, if both claimant and respondent agreed. As to whether action can be taken against recalcitrant retailers, CASE is empowered under the Act to apply for court injunctions against errant retailers who carry out unfair practices, such as product misrepresentation and pressure selling.

As highlighted by some of the Members who have spoken, educating consumers on their rights under the proposed law and the fact that these rights cannot be contracted out or signed away will form an integral part of the education campaign on Lemon Law that we will work with CASE on. I have taken note of the views of several of the Members to educate through different channels, different ways, even working with trade associations, helping the smaller retailers, SMEs. I think those entities are important to educate. We will try to reach out to as wide a group as possible. Because to implement this effectively and get a better understanding of it, we need to reach out to both sides, not just to the consumer but also the businesses.

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On Mr Ang Wei Neng's query on whether we will maintain a registry of unreasonable consumers who make repeated claims, we will not do so as it may not be possible to determine whether the claim was reasonable or not. It is actually hard to tell. However, retailers should be able to keep track of repeat abuses of the law through their point of sale system and CASE will also keep a record of consumers who seek their advice or assistance on claims.

There was a concern that some manufacturers may decide to cease providing warranties altogether since the law obliges the retailer, not the manufacturer, to provide the remedy. While it is a commercial decision whether manufacturers will provide warranties or not, but I think with this law it provides certain discipline or an opportunity for the retailers to relook at their contractual and commercial arrangement with the manufacturers. With the Lemon Law, maybe it is a back-to-back agreement with the manufacturer and they can practise good quality exchange or returns policy between the manufacturer and retailer and consumer. We do not expect that manufacturers will cease to provide warranties because warranties are also part of a selling point. It is important for consumers at the point of decision, they would also look at whether there is warranty or not. Most manufacturers would have that understanding, retailers as well. So retailers and manufacturers must have the contractual arrangement that were beneficial for both.

Let me address some of the other questions. Mr Zainal Sapari asked if the Lemon Law applies to pets and puppies. This Lemon Law does apply to pets too. I was wondering how you would apply the repairs to pets. I guess it is a life, so we cannot just repair it. But I guess in many circumstances, just for discussion's sake, let us say, you buy a pet, at the point of delivery the pet is not feeling too well – puppy or otherwise – the seller would have to treat the disease or the illness or the sickness before delivery. Maybe that is one way. I have a friend who runs pet centres all over Singapore and he takes extreme care to make sure that the pet is in good condition before he sells them and he follows up after selling them to make sure that the pets remain in good condition, under good care. Some of these approaches are really arrangements between the retailers and consumers. So it is included.

In conclusion, let me borrow a statement from Mr Patrick Tay's speech, "The introduction of the Lemon Law is just a start and serves as a deterrent to errant retailers selling shoddy products and at the end of day what the law seeks to do is not to remove all lemons – you cannot. It is difficult and it is practically impossible – but to encourage transparency and good business practices." And many a time the law is a deterrent. On the ground, with this law, it would encourage good practices and make sure that we weed out the bad retailers; and the good retailers remain in place. That can help tourism, our retail sector and business sector. It will also bring sellers and consumers to work together to improve the retail environment in Singapore. Most importantly, it will ensure good quality products. It is goodwill for the retailers and goodwill and trust between both the retailer and the buyer and, most importantly, retain customers for the businesses and this will be beneficial for retailers and consumers and for Singapore's retail sector as a whole.

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Mr Speaker: Mr Lim Biow Chuan, do you have another lemon?

Mr Lim Biow Chuan: Just a point of clarification to what the Minister of State said. CASE does charge a small admin fee other than membership in CASE, for handholding the consumers.

Mr Gerald Giam Yean Song: Mr Speaker, just a clarification. I asked the question about whether the consumer can ask for a replacement without attempting a repair first. I think that would have helped Mr Lim Biow Chuan quite a bit in his case.

Mr Teo Ser Luck: The consumer can always ask for a replacement before repairs, say, within the six months under the Lemon Law. But it is the retailer's right to decide if it is to repair or replace based on his own calculation of costs. That rests with the retailers under the law.

Mr Zainal Sapari: Sir, just to clarify on my puppy lemon law. I am referring to a situation where pet purchasers get a sick puppy. They should have the right to return the sick pet back to the pet store or to be reimbursed for the medical expenses incurred in treating the pet should they decide to retain the animal. Yes, just a point of clarification.

Mr Teo Ser Luck: I will use the same analogy with the goods for the pets: replace, repair, even refund under the Lemon Law, then I think the pet must be in a healthy condition before it is sold to you. As I mentioned, healthy condition means, you bought the pet and within six months it has to be treated for a sickness or illness that happened at the point of delivery, it is justifiable to claim the medical expenses. If the retailer cannot prove otherwise that at the point of delivery, there was no sickness then the buyer has to be reimbursed all medical expenses.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [ Mr Teo Ser Luck ].

Bill considered in Committee; reported without amendment; read a Third time and passed.