EXEMPTED BUSINESS (Motion)

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EXEMPTED BUSINESS:

(Motion): Resolved,

That the proceedings of the business set down on the Order Paper for today be exempted at this day's sitting from the provisions of Standing Order No. 1. - [Mr Mah Bow Tan].

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CONSUMER PROTECTION (FAIR TRADING) BILL: Debate resumed.

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Mr Ong Kian Min (Tampines): Mr Deputy Speaker, a few years ago, I was in the United States and telephoned a number of car rental agencies to ask about their rental rates. After enquiring about the rates with the receptionist of a particular company, I thanked her and said I would consider her quote and would call her again when I had decided. She immediately responded that if I could confirm the reservation then and there, she would throw in a $20 petrol voucher into the package. The company knew very well that once they lose that contact with me, a potential customer, the chances of making the sale are reduced drastically. But, if I am influenced by the petrol voucher and succumb to the selling tactics, accept the offer and later regret my decision, should I be entitled to complain?

Sir, on the other hand, compare that to a situation I came across in our Orchard Road Lucky Plaza. I had a foreign visitor and she wanted to buy a video camera. I recommended her to a friend who sold consumer electronics and she bought a Sony videocam for $1,500. That was the best price my friend could offer her. The next day, while she was shopping in Lucky Plaza, she saw the same model of video-camera in the shop window and asked for the price. The man straightaway quoted her $1,400. Of course, she was upset, called me and complained that my friend had cheated her. She said the walk-in opening quote, even before bargaining, was below what she had paid for. I called my friend and asked whether he had over-charged. He told me that if I could buy the same video-camera for $1,400, he would gladly buy it from me. So, the next day, I went with my tourist friend to that Lucky Plaza shop. True enough, when I asked the shopkeeper, he quoted me $1,400. But when we said we were interested and would like to buy that camera, the shopkeeper said the model we wanted

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was an old model and tried to persuade us to buy another model but of a different brand which he could offer us for the same price. But when we insisted on the Sony one, he said he had no stock in the shop and had to order from the agent which could take 3 days. When we said we could wait, he warned us that at that price, the camera would not come with any warranty.

The sales tactic is obvious. Many tourists go shopping for a good price. They know what they want to buy and go around many shops looking for the best price. So, these shopkeepers quote the enquiring tourist a very low price on the item that he is looking for so as to entice him into the shop. After that, they persuade him to buy something else that is inferior but which would give the shop a fat profit. Now, if the customer finds that he has been over-charged, could he complain?

Sir, there is a fine line between a bad bargain and an unfair bargain, and the difficulty is where to draw that line and where to set the balance. This Bill is a good start and seeks to make that line clearer as to what is to be considered undesirable trade practices. This Bill is a result of many years of study, initiated by the Consumers Association of Singapore, several Members of this House and the Ministry of Trade and Industry, into the feasibility of having fair trading legislation in Singapore. Sir, it is a timely one. This Bill, when passed will further enhance consumer protection as well as complement existing legislation such as the Multi-level Marketing and Pyramid Selling (Prohibition) Act and the Multi-level Marketing and Pyramid Selling (Excluded Schemes and Arrangements) Order 2000.

However, Sir, I have a number of questions on the Bill. First, I would like to ask how will the Act be administered and who will administer it? We should

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not look to CASE alone to monitor fair trading for three reasons. The first is that the term "fair trading" compels us to address both the interests of the business and the consumer to bring about better economic performance and an improved marketplace.

The second reason is that CASE is primarily concerned with the interest of the consumer, not the supplier.

The third reason is that CASE is a non-profit organisation dependent on grants, sponsorship, donations, volunteers and members' subscriptions. It does not have the same clout as a Government body. In places like the UK, Melbourne, New South Wales, Queensland, there are Offices of Fair Trading set up by the government that ensure compliance and enforced legislation. For instance, the New South Wales Office of Fair Trading safeguards consumer rights and advises traders on fair and ethical practices. In addition, it investigates unfair practices and provides a licensing system. Will there be an official Government body that will be able to administer the new Act? An Office of Fair Trade set up by MTI can look into the interests of both businesses and consumers. It can work together with CASE, Singapore Tourism Board and various other bodies to provide information, advice and education. It can be in a better position to ensure due compliance, conduct market studies, fine-tune and improve business-consumer confidence.

Secondly, the First Schedule lists the transactions excluded from the Bill. I note that the professions, such as legal services, medical practices, accountancy, and other professional services, are not excluded from the application of this Act. These professions are already regulated by their own respective governing statutes and have their own governing bodies and rules. For example, any

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complaint regarding the conduct of a lawyer can be brought up to the Law Society who will investigate and, if found to be true, has the power to censure and even disqualify the lawyer concerned. Therefore, including such professions in the Consumer Protection (Fair Trading) Act would lead to duplication of channels and give the consumer the right to seek remedies by complaining to one governing body or to the other, and I think this is onerous on the professions and undesirable in general.

Thirdly, the Bill provides a framework for consumers to have civil remedies. However, we all know that prevention is better than cure. First and foremost, I agree with Mr Yeo Guat Kwang that the emphasis should be on the education of both the consumers and suppliers. Hopefully, education on fair trade practices will lessen the likelihood of time-consuming and potentially expensive disputes.

Such education will also stretch beyond legal rights and remedies. The recent publicity of e-mail and time-share resale scams show that consumers will benefit from some lessons in business savviness so that they will not fall prey to unscrupulous dealings of deception. Legislation may help consumers get their money back but education will help prevent the loss from happening in the first place.

Sir, the education process should also not leave the suppliers out. If the suppliers are equipped with a thorough knowledge of their obligations under the new legislation, there will be a win-win situation for themselves, the consumers and the economy.

Fourthly, CASE is working to expand its mediation centre in anticipation of a greater need for mediation once the Bill is enacted. There may be a slew of disputes that may seek mediation. Will the

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mediation centre of CASE alone be enough to serve the function? What will MTI do to encourage the development of alternative dispute resolution mechanisms, and how swiftly will this take place?

Fifthly, with regard to the cancellation of time-share and direct sales contracts, I would like to ask if a cooling-off period of more than three days, excluding Saturday, Sunday and public holidays, will be considered. For the purpose of comparing the duration of the cooling-off period, the New South Wales Door-to-Door Sales Act allows for a cooling-off period of 10 days, while the UK Consumer Credit Act provides for a cooling-off period of five days. After entering into a transaction, a timeframe of the contemplated three days, excluding weekends and public holidays, for the consumer to consider his purchase, find out more about the transaction, perhaps seek some advice and go through the motion to cancel the contract seems a little short. In fact, the Code of Ethics and Conduct drawn up by the Direct Selling Association of Singapore requires its members to give the consumer a 7-day cooling-off period to cancel the contract without penalty. Sir, for practical reasons, I feel that the present Bill should allow for a cooling-off period of at least five days, excluding weekends and public holidays.

Sir, lastly, I am not sure about the rationale for imposing a monetary cap of $20,000 on the value of a claim for unfair practice under this Act. The reason cited is that this Act is intended to protect the small consumers. But, if a supplier uses a trade practice that is specifically cited in this Act as errant and unfair to secure a sale in a consumer transaction, no matter how large the value is, surely he should be held accountable. If a consumer entered into a consumer transaction, eg, he bought a very expensive watch. as a victim of the unfair trade practice of the supplier, and that

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unfair practice is covered by this Act, but not under any other existing criminal laws or statutes, what remedies would he have against the supplier? In other words, if the supplier's malpractice falls within the Penal Code, the Unfair Contract Terms Act, the Misrepresentation Act or other existing laws, the customer has the right of restitution against the supplier no matter how small the value of the claim. But if the unfair practice is not covered under any existing laws other than this Act, and the value of the claim is above $20,000, the customer would then not have any recourse against the supplier, whether under the Consumer Protection (Fair Trading) Act or any other existing laws.

Sir, I hope the Minister will take the above comments into consideration. I support the Bill.

Dr Teo Ho Pin (Holland-Bukit Panjang): Mr Deputy Speaker, Sir, I rise in support of the Bill.

The proposed Consumer Protection (Fair Trading) Bill marks a significant step forward for both consumers and businesses as it protects both consumers and businesses against unconscionable conduct. It will promote fair trading in our marketplace where consumer transactions can take place fairly between consumers and businesses. The Bill will provide added protection to vulnerable consumers who, in the past, had little protection against unfair business practices.

Many consumers, especially the elderly, illiterate and children, had fallen prey to various scams in Singapore resulting in much financial loss. Some had lost their life savings to investment scams or other unconscionable practices of businesses. At the same time, good businesses are also losing out to the "cowboys" who are undercutting them, as these cowboys often do not have proper business infrastructure or marketing

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costs. As such, some good businesses also suffer an "image problem" when grouped under the same industry as these cowboys. For example, industries which receive many complaints of unfair practices include pyramid selling, time-share, renovation, telecommunications, door-to-door sales, travel, furniture, motor vehicle, electrical, investment schemes and many Internet scams.

All these are set to change with this win-win piece of legislation which, it is believed, will bring in a third win to the Government, as the legislation aims to weed out "cowboys" and tackle unconscionable behaviour head on resulting in the creation of a fair trading marketplace in Singapore. The Act will also boost confidence among consumers, especially tourists, who come from countries where Fair Trading Act exists such as the UK, US, Australia or New Zealand. Consumers no longer lament that there is a lack of teeth for them to bring unconscionable traders to the book. For businesses, it would mean that they can now be assured that there will be a more level playing field to conduct their businesses in Singapore. This may further encourage more bona fide businesses to enter the marketplace and add more vibrancy and diversity in Singapore.

Sir, while the Act has given teeth to consumers, I am not sure whether consumers will be able to bite and seek justice against unfair trade practices. I understand that the Ministry will continue to encourage greater consumer responsibility through the principle of caveat emptor . But, we must always understand that unconscionable traders are increasingly using more sophisticated means to con consumers.

Sir, let me cite two examples of scams from this book Little Black Book of Scams, published by the working group for the Ministerial Council on Consumer Affairs, Australia. Example 1, I quote:

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"Hello, this is Jim from ABC bank. We have had trouble with the bank's computer systems, so to protect your funds we are going to transfer all your money to a special bond account. In order to transfer the money I will need to get your bank account details and a verbal authorisation to transfer the funds."

Example 2, I quote:

"Hello, this is Bonnie from Smatercard. In order to make your credit card compliant with our new system we are going to send all our customers a sticker that you will need to affix to your card. So can I just have your credit card number for verification?"

Sir, unfortunately, these common scams are not covered in this Bill and consumers will have difficulty obtaining redress under such circumstances.

Clause 8 of the Bill empowers any specified body (to be appointed by notification in the Gazette by the Minister) to enter into a voluntary compliance agreement, as it has reasonable grounds of unfair trade practices. May I ask the Minister what are the criteria for appointing this specified body and whether the specified body will be a neutral and independent body that will help resolve the unfair practices between consumers and businesses? Is there any cost involved in entering into such an agreement? Furthermore, is the specified body empowered to take any further action against the unfair trader who refuses to enter into the voluntary compliance agreement?

Sir, in practice, this arrangement is not effective in weeding out unfair practices. Very often, traders who engage in unfair practices would not enter into such an agreement. Based on CASE's experience in mediating consumer disputes, it is often the good businesses that will respond to such calls to resolve disputes. "Cowboys" often disregard CASE's call to

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seek redress or resolve the disputes. Thus, I hope the Minister can assure the House that this "voluntary compliance agreement" can weed out unfair trade practices in Singapore.

Clause 12 of the Bill also specifies limitation periods for actions under the Act. Although one year may seem to be a reasonable period, there are many instances where the quality of a product can only be tested through usage and time. For example, water-proofing for toilets, material used for sofa infills, car parts in concealed locations of car engines. The majority of consumers will have little knowledge till the failure of these components and thus suffer consequential losses. Although the Bill states that the starting date may be postponed till the earliest date when the consumer might reasonably have knowledge that the supplier had engaged in unfair practice, I feel the onus should rest on the supplier to provide evidence that he has made correct and transparent representation of his product to the consumer during the business transaction. Otherwise, the protection of consumers will be reduced by this limitation period.

Sir, finally, I would like to urge the Ministry to seriously consider setting up a Fair Trading Office to enforce this Act. Without a Fair Trading Office, it is like having traffic rules without traffic police. Experiences from many countries with Fair Trading Act have shown that it is vital to have an enforcement body, which is empowered to take action against unconscionable traders. The presence of a Fair Trading Office serves as a good deterrence against unfair trade practices. It also keeps a close watch on potential "cowboys" in the marketplace. The Act must be more proactive to avoid disputes in our marketplace instead of focusing on consumer protection and redress. To

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make Singapore a fair trading marketplace, we must have a comprehensive set of fair trading legislation, an effective enforcement agency, good business practices and a well-informed consumer base.

While the Bill further enhances consumer protection in Singapore, I am concerned that vulnerable consumers, such as the elderly, illiterate and children, may need further protection. The Ministry must provide more resources to constantly educate and update consumers to make more informed choices and avoid scams.

Sir, I support the Bill.

Mr Chay Wai Chuen: Sir, I welcome the Bill as it provides a first comprehensive set of rules as well as practices which oblige traders and consumers. I, however, want to cover three main points on the Second Schedule which specifies a list of unfair practices. They relate to (1) overcharging, (2) representation, and (3) quality of goods and services delivered. For some of these categories of overcharging, I think the rules and regulations for certain trades may be difficult to judge. Specifically, as has been mentioned just now, in areas of professional services, eg, doctors or lawyers, they have their own professional bodies. If there are cases of complaints about overcharging by doctors/GPs and lawyers, then there may be problems in trying to figure out the quality aspects of such services, so that judgment on their fees and so on may be difficult. In cases like these, what happens?

Another example is that many people would have experienced charges of service by plumbers. It varies. I personally have experienced plumbers who charged me $100 for 10 minutes of service. That kind of situation, I think, is quite obvious. There again, if you want

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to prove it, I am not sure whether the existing process in the Small Claims Tribunal would allow for this. I hope the Minister would want to consider the suggestions brought forward by many of my colleagues about policing by the Fair Trading Office, which could help patrol some of these practices.

The existing proposed mechanism of the Small Claims Tribunal (1) and (2) specified body approach

does not seem to be very clear to me how one, through the Small Claims Tribunal system, would be able to effect this claim. Two is through a specified body, and through the specified body getting the Injunction Proposals Review Panel to work.

I agree with the Member of Parliament, Mdm Halimah, just now that the approach to do it must be simple enough so that the effect of the action is felt. If the procedure is too difficult or too long-winded, then the efficiency and effectiveness for consumers to complain and to get the results of the action will be difficult.

I want to clarify one more point. With regard to some of these market shop operators who sell financial futures or whatever, what is the recourse for consumers who fall prey to these practices, and what are the resources of claim that they have? Very often, this kind of financial scams or financial schemes which are marketed by cowboys, or what we call bucket shop operators, may actually cause more damage, and $20,000, as they claim, is admissible under this Consumer Protection (Fair Trading) Bill.

Finally, I would want to compliment the Ministry for coming up with this Bill. I can agree it is difficult to administer. But the first step is being taken. For many big retailers of brand names in Singapore, I do not think that there is a problem to comply. For a lot of smaller operators, ie,

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market shop operators, I think they will have to really start cracking. But even for many retailers or suppliers with established names, they will have to really think about some of the consequences of the claims that they make, the discounts that they promise and the quality of their goods. And I think that in that direction, the Consumer Protection (Fair Trading) Bill will let them take more considered actions to even improve further.

In general, I support the Bill.

Assoc. Prof. Low Seow Chay (Chua Chu Kang): (In Mandarin ): Mr Deputy Speaker, Sir, I am a consumer myself. In my many years as a Member of Parliament, I have come across a lot of cases where consumers were victimised by unscrupulous traders with unfair practices. Yet there is hardly any law in Singapore to protect our consumers. The only thing they could do is to go to CASE. Under pressure from CASE and fearing adverse publicity, some of these errant traders may compromise and pay some damages. Some house-owners who have refused to pay their contractors because the renovation work was not carried out according to the agreed conditions were sued by the contractors, and ordered by the court to pay damages to the contractors.

Thus, it is necessary for some legislation to be enacted to protect the consumers. This Consumer Protection (Fair Trading) Bill before us is indeed a very timely piece of legislation, I am fully in support of this legislation.

The new law is to provide for the victims of unfair practices to claim against the errant traders and to prevent these traders from perpetrating the unfair practices. But, the definition of "unfair practices" under this Bill is quite narrow, as it covers only deceit, misleading, and cover-up acts. Unfair trading should include other types of transaction where

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the consumers are visibly placed in a disadvantaged position.

First, the banks, credit card companies, insurance companies or even big electrical shops often practise forced selling, and mislead their customers into signing some lengthy contracts printed in grey colour and using very small print. The consumers were asked to sign those documents without much time in digesting the contents and under some rather suspicious conditions. Once the contract is signed, the unsuspecting consumer will have to honour the terms of the condition, whether they like it or not. In my view, this is an unfair transaction for the consumer.

Secondly, the parking coupons, cash cards and ez link cards which we use are also examples of unfair practices. All these coupons and pre-paid stored-value cards are the means deployed by their respective operators to take advantage of the motorists and commuters. They are operated under a monopoly, and cater mainly for the convenience and easy administration of the operators. There is no law to compel them to pass on the savings from these devices to the consumers. In parking, the motorists are made to do the work for the car-park attendants. The motorists have to tear the tabs in the coupons to indicate the time of commencement of their parking. When the wrong tab is torn, the coupon is immediately invalidated, and no refund on the unused coupon will be entertained. If a mistake is made on the time or date on the coupon, the consumer has to face the punishment of paying car parking fine. When the parking rates are adjusted, the old coupons showing the old rates will no longer be valid if he does not exchange the old coupon for a new one. Coupon-parking is a device aimed at cutting car park operation cost for the URA and the HDB. But the savings are never passed

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down to the consumers. Consumers are doing the job of the car-park attendants, free of charge, and any mistake made in the process will render the coupon invalid, and they have to face punishment if they make a mistake and they also will have to suffer the loss incurred if the coupons become invalid. To me, this is a form of unfair practice!

In the case of cash card and the ez link card, consumers have to pay upfront and store the value in the cards. According to my estimate, the total value stored in all these cards in circulation in Singapore is more than $100 million. The operators are getting all the cash, free of interest. On top of it, they save on labour cost, but what do the consumers get? The operators do not pass on the benefits to the consumers. Take the ez link card, for example. The consumers are asked to pay for the cost of the ez link cards. For every card they purchase, they have to pay $5. That means the consumers have to pay EZ Link in helping the MRT and bus companies to save on their operational cost. I think this is very unfair. If the card malfunctions, the consumer loses all the value stored in it, as the card company will confiscate all the remaining money stored in the card. How does this differ from an act of daylight robbery? On one occasion, when I put my trousers in the washing machine, I forgot to take out the cash card from the pocket. The cash card was damaged. I filled up an application form and sent my cash card, together with the form, to the cash card company. The company never responded and the cash card, together with all the remaining money stored in it, was gone forever. The cash cards and ez link cards are designed for the benefit of the companies and it is unfair for the consumers to pay for the cost of the card and lose the money stored in the card, if it should be damaged.

All these instances which I have mentioned are not covered by this Bill. I

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hope, and I believe, that this law will soon come up for review, and I hope that those unfair practices which I have illustrated would be covered in the new amendment Bill.

There is no provision in the Bill to punish those traders who are involved in unfair practices. If these unscrupulous traders continue to indulge in this kind of unfair practices, should not they be punished? Otherwise, they will just simply ignore the law and do as they please.

While I fully support the Bill, I hope that the authority will consider the points that I have mentioned, and incorporate some provisions in future amendment Bill to deal with such unscrupulous traders.