Parliament: New law gives shoppers more protection against errant retailers

Shops in Sim Lim Square. The amendments to the Consumer Protection (Fair Trading) Act target "black sheep" retailers and are also aimed at preventing a repeat of the Jover Chew saga. The former mobile phone shop owner in Sim Lim Square and his worker
The amendments to the Consumer Protection (Fair Trading) Act target black sheep retailers.ST PHOTO: ALPHONSUS CHERN

Errant retailers will no longer be able to secretly close and reopen their shops under a different name to escape detection, under changes to the law approved by Parliament.

By the end of this year, government agency Spring Singapore will have wide-ranging powers to investigate and take enforcement action against retailers who persist in unfair practices.

The amendments to the Consumer Protection (Fair Trading) Act send a strong deterrent signal to the small number of businesses which engage in unfair practices, Minister of State for Trade and Industry Koh Poh Koon told the House during the debate, which saw 14 MPs rise to speak in support of the changes.

The new law aims to stamp out "black sheep" retailers and prevent a repeat of the Jover Chew saga.

The former mobile phone shop owner in Sim Lim Square and his workers were jailed last year for cheating 26 victims into agreeing to buy mobile devices worth over $16,000 over a 10-month period.

With its new powers, Spring - a statutory board under the Ministry of Trade and Industry which oversees the growth of enterprises in Singapore - will be able to search and enter premises without a warrant to gather evidence against a persistent errant retailer.

This will allow the agency to take action quickly and file a timely injunction - a court order to stop the retailer from continuing with unfair practices - if needed.

It will also be an offence for anyone to obstruct Spring's investigations, such as by destroying documents or giving false information.

Under the new law, the courts can also require errant retailers to alert customers that they are under injunction, such as by printing a notice on their invoices.

The retailers also have to alert Spring when there are changes to their shop's address or employment status. If they fail to comply, they may be charged with contempt of court.

The changes will plug some gaps in the current consumer laws, said Dr Koh, who is also Minister of State for National Development.

Currently, the Consumers Association of Singapore (Case) and the Singapore Tourism Board handle consumer complaints. But the two agencies do not have investigative and enforcement powers.

They can negotiate with retailers, arrange for mediation or invite retailers to sign an agreement to stop their unfair practices. If the retailer refuses to sign the agreement or breaches it after signing, the agencies can take out an injunction.

But even if a court order is issued, business owners tend to close their shops and reopen under a different name to dodge penalties.

Under the new law, doing so would amount to a criminal offence.

In a debate that lasted three hours, 14 MPs raised concerns over issues such as the scope of the law, and how it will be explained to the layman.

Mr Patrick Tay (West Coast GRC) asked if the law applied to online retailers and agents who act as middlemen between buyers and overseas suppliers.

The Act provides the same protection to consumers whether their purchases are made online or from a brick and mortar shop, said Dr Koh.

Agents who "carry on a business" - meaning that they carry out several transactions, and not just a one-off deal - are also subjected to measures under the Act, he added.

Mr Melvin Yong (Tanjong Pagar GRC) urged Spring and Case to educate consumers, particularly the elderly, foreign workers and tourists, on their rights as consumers.

Raising awareness of the changes to the law is a priority, said Dr Koh, who added: "Business models can change. Consumer shopping patterns may also evolve. So it is not always possible to use legislation to cover all manner of consumer actions... Consumer education will remain the key pillar of our consumer protection framework."

Five MPs also asked whether more will be done to protect consumers who buy prepaid packages, following the sudden closure of gym chain California Fitness in July.

Mr Lim Biow Chuan (Mountbatten), who is also president of Case, noted that the amendments "make no attempt to discourage the taking of prepayment or deposits for future services".

Dr Koh said it would be "very challenging" to impose a broad-based measure on all businesses to protect consumers against loss of prepayments from business closures.

He noted that overseas jurisdictions such as the European Union, Australia and Hong Kong do not adopt such a stance, adding: "Such measures may affect the cost of doing business which would eventually be passed on to consumers."

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A version of this article appeared in the print edition of The Straits Times on September 14, 2016, with the headline 'New law gives shoppers more protection against errant retailers'. Print Edition | Subscribe