Forum: Close regulatory loophole in consumer protection framework

The sudden closure of True Fitness and True Yoga, leaving members stranded with substantial losses and locked out of their accounts, is a distressing deja vu for Singapore’s consumers (True Fitness and True Yoga to shutter; customers report losses of more than $609,000, Sept 11).

Once again, loyal customers bear the brunt of corporate insolvencies while watching advance payments vanish.  

This recurring pattern highlights a regulatory loophole in the consumer protection framework.

While businesses have the mechanisms of voluntary liquidation, consumers are treated as unsecured creditors with little to no recourse.  

Legislation must be enhanced to safeguard prepayments. 

Consumer funds for unfulfilled services should be mandated to be held in escrow accounts or bonded, guaranteeing that unused benefits are fully refunded if a business ceases operations.

Prepayments must never be treated as general working capital to prop up failing balance sheets.

It should also be made a criminal offence for operators and management to market and collect fees for long-term packages when they are already aware of severe financial distress or impending closure. Accepting money under such pretence smacks of bad faith.

Singapore has built a stellar reputation on trust, fairness and robust commercial standards. Our laws must evolve to ensure that consumer protection matches this ethos, sending a firm signal that preying on consumer trust through sudden, calculated shutdowns will not be tolerated.

Tan Hiok Seng