The Consumers Association of Singapore (Case) empathises with consumers who have pre-paid for services and suffered losses when businesses close ("California Fitness gym closures: Get firms to insure packages over $500" by Mr Christopher Low Kin Siong; "Bar all package deals" by Dr Michael Loh Toon Seng , Forum Online; and "Tighten rules against firms collecting advance payments" by Mr Chua Boon Hou, all published on July 21).
This happens from time to time, and there are ways consumers can protect themselves.
One of the ways is to patronise companies with CaseTrust accreditation.
The accreditation does not guarantee that the business will not fail.
However, there is some measure of protection for consumers in the event of failure because many of these accredited companies which collect pre-payments are required to undertake insurance, partake in escrow schemes or provide performance bonds to protect consumers' pre-payments (in the event of closure of a business like California Fitness).
However, the CaseTrust accreditation scheme is limited in its protection of consumers, as it is a voluntary scheme and businesses are not compelled to seek such accreditation.
Nevertheless, we agree that there is a need to tighten the current laws to ensure that consumers' pre-payments are adequately protected. Case will discuss with the Ministry of Trade and Industry to look into pre-payment protection for package deals.
Meanwhile, we urge consumers to verify the contents and context of a package deal.
Consumers should always be mindful that there is a risk that pre-payments may be lost in the event of business closure or non-delivery of a product or service.
Lim Biow Chuan
Consumers Association of Singapore