Why It Matters

Bridal salon's sudden closure: Packages of disappointment

Bridal studio Sophia Wedding Collection, which specialised in pre-wedding photo shoot packages and attire rental, shut last week, leaving customers stranded with a wedding date but no get-up.

Such incidents are not new. Since 2009, the sudden closure of firms - including nail salon Wax in the City, major spa chain True Spa and gym Sky Fitness - has left thousands stranded with millions of dollars unused on their packages. Hundreds of police reports have been lodged and countless claims made with the Small Claims Tribunal. Few victims, if any, have recovered their money, and the business owners, it seems, escape unscathed.

Many people are often shocked that this can happen in squeaky-clean Singapore.

It boils down to the Companies Act. Owners of private limited firms - which most pre-payment businesses are - have limited liability and cannot be sued directly for company debts. It becomes criminal fraud only if one can prove that the firm intended to cheat. This is difficult to do as closures may look simply like failed business endeavours.

 

Yes, consumers should do their homework. In fact, the Consumers Association of Singapore (Case) has advised consumers against buying prepaid packages. However, it would be a pity if packages have to be avoided to cut the risk of being cheated. Prepaid packages, if offered by a reputable firm, help both parties: The business can manage its cash flow better and the customer pays less.

Banks here should start insuring card users like those in Europe do. The police should also help Case, which does not have investigative powers, to look into businesses that seem to have deliberately cheated their customers. In the past, the police have said such matters are commercial transactions and out of their hands. But last month, it started investigating hair salon The Scissorhands, after it shut and left hundreds of customers in the lurch.

Rules cannot be too onerous for firms to set up here, but neither should errant business owners be able to get away scot-free.

A version of this article appeared in the print edition of The Straits Times on October 13, 2015, with the headline 'Packages of disappointment'. Print Edition | Subscribe