SINGAPORE - Consumers lost a whopping $2.37 million in prepayments in 2019 because of sudden and unexpected business closures ranging from renovation contractors to fitness clubs.
Nearly half of this or $1.15 million was the result of the shuttering of at least 15 car dealerships, as well as the non-transfer of car ownership by these dealers.
The Consumers Association of Singapore (Case) called the amount concerning, and warned that the issue of prepayment losses will likely remain a pressing one given the current economic landscape.
The motor car industry regained the top spot for highest number of consumer complaints last year, after being overtaken by the beauty industry in 2018, according to statistics released by the consumer watchdog on Monday (April 20).
Case received 1,683 complaints against the car industry last year, a drop overall from 1,802 received the year before.
About four in 10 of the complaints were related to defective or non-conforming goods, mostly involving pre-owned cars.
The beauty industry accounted for the second highest number of complaints at 1,598, with a third of them involving pressure sales tactics.
In one instance, Case said, a consumer who visited a beauty salon for eyebrow embroidery at an advertised promotional price of $99 ended up having to fork out more than $2,000.
According to the complaint, salon staff embroidered one eyebrow before informing the customer that she had been given a premium eyebrow embroidery worth $2,280.
The staff allegedly threatened not to complete the other eyebrow unless payment for the premium treatment was made, leaving the consumer feeling like she had little choice, Case said.
Contractors, electrical and electronics, and furniture rounded up the top five most-complained-about industries.
The consumer watchdog received 14,867 complaints in 2019, down from 16,090 the year before.
About seven in 10 of those negotiated or mediated by Case were resolved, with nearly $2.6 million in cash and in-kind recovered.
At least 427 complaints were related to the loss of prepayments due to sudden business closures, the bulk of which came from the car, beauty, renovation contractor, bridal, and fitness club industries.
While businesses generally collect some form of prepayment prior to the delivery of goods and services, the amounts collected for these industries tend to be substantial as they involve big-ticket items or long-term commitments, Case said.
Losses suffered by 33 consumers who had made prepayments for cars, for example, amounted to $1.15 million after the dealerships went bust or failed to transfer the car ownership after being paid.
In one instance, Case said, a consumer had made full payment of $78,000 for a pre-owned car and was told by the dealer that its ownership would be transferred to him within 10 days.
It still had not been transferred four months later, when the dealer became insolvent.
Case said it is very concerned about the amount of losses suffered by consumers and added that it will intensify education efforts on the risks involved with prepayments and how consumers can protect themselves.
It is also engaging government agencies and industry stakeholders to push for targeted prepayment protection measures for problematic industries, it said.
Case president Lim Biow Chuan said: "We are deeply concerned about the amount of losses suffered by consumers due to sudden business closures.
"In view of the current economic landscape and as more businesses are affected, it is likely that this issue will remain a pressing concern for consumers," said Mr Lim, who is also MP for Mountbatten.
"We would like to call on consumers to be vigilant and exercise caution when they make advance payments," he said.
