Source: Hong Kong Government special administrative region – 4
The Government today (June 29) launched a two-month public consultation on policy proposals relating to the Trade Descriptions Ordinance (TDO).
The Government has always been committed to safeguarding the legitimate rights and interests of consumers. It endeavours to ensure that consumers are well protected through the establishment of an effective, transparent, fair and just regime, while maintaining a favourable business environment. Over the years, the Government has actively enhanced relevant legislation and consumer protection measures in response to the latest consumer trends and market situations. The Customs and Excise Department (C&ED) and the Consumer Council have also been combating unfair trade practices through enforcement actions and publicity and public education respectively.
Notwithstanding the diverse consumer protection measures currently in place, the Government has noted the prevalence of the pre-payment mode of consumption in the beauty and fitness services industries, which has given rise to problems from time to time. In recent years, the sudden business closure of a large chain fitness and beauty group also resulted in financial losses for many consumers, drawing widespread concerns in the community. This reveals the ongoing problem of the pre-payment mode of consumption in relevant industries and the considerable risks faced by consumers under unfair trade practices. In this connection, the Government has conducted a comprehensive review of the TDO, taking into account practices in other jurisdictions and various factors.
A Government spokesman stated, “Issues such as improper selling tactics and risks of the pre-payment mode of consumption are concentrated in the beauty and fitness services industries. Complaints involving the beauty and fitness services industries accounted for nearly 90 per cent among industries with the highest tendency for improper selling tactics. Consumers often enter into contracts of long duration involving substantial pre-payments under aggressive commercial practices and/or persuasion selling tactics.
“Meanwhile, complaints concerning wrongly accepting payment mainly stem from traders’ inability to deliver the services to consumers in accordance with the commitments made after accepting pre-payment owing to various reasons (including business closure). Between the period of 2020 and 2025, beauty and fitness services took up the largest portion of complaints involving wrongly accepting payment at around 50 per cent. There are certain limitations under the existing TDO on the C&ED’s investigation work, and situations of evading investigations could not be effectively prevented.”
The spokesman emphasised, “With growing concern in the community regarding high-pressure and persuasion selling tactics, as well as the risks of the pre-payment mode of consumption, the Government has to step up its efforts to provide better protection to consumers, while respecting the freedom of contract to maintain a favourable business environment in Hong Kong. Therefore, the more pragmatic direction is to adopt a targeted approach, stipulating proportionate regulatory measures on industries that are most prone to improper selling tactics and specific contracts involving large amounts of pre-payments.”
Based on the above situation and policy principles, the Government has put forward the following three policy proposals in the public consultation document:
(1) Stipulating a statutory cooling-off period on pre-paid consumer contracts for beauty and fitness services to provide consumers with room to reconsider their pre-payment decisions following the conclusion of contracts. The key proposals include:
*The proposed cooling-off period is seven calendar days, and the proposed refund period is 14 calendar days.
*A regulatory threshold based on the contract amount will be set up. The proposed thresholds for consideration include (i) $3,000 or above; (ii) $8,000 or above; or (iii) $15,000 or above. This would protect consumers while minimising the impact on small-value transactions.
(2) Imposing a statutory limit on contract duration and other restrictions on pre-paid consumer contracts for beauty and fitness services to reduce the risks of the pre-payment mode of consumption. The key proposals include:
*The proposed limit on contract duration is two years, providing a useful indicator for consumers to evaluate whether the pre-payment amount is reasonable, while minimising the impact on the majority of contracts bearing relatively more reasonable durations.
*It is proposed that traders be prohibited from entering into a contract with consumers that takes effect later than three months after the contract is entered into.
(3) Including Section 13I of the TDO pertaining to the offence of wrongly accepting payment into Schedule 1 to the Organized and Serious Crimes Ordinance to empower the C&ED with additional investigatory and enforcement powers, including prohibiting any person from dealing with a relevant property through a restraint order from the court. The proposal aims to handle cases involving wrongly accepting payment more effectively, and enhance the deterrent effect on unscrupulous traders.
The consultation document has been uploaded to the website of the Commerce and Economic Development Bureau (www.cedb.gov.hk/en/news-and-related-information/consultation-papers.html), and the key points of the detailed proposals are set out in the Annex.
The Government will organise consultation sessions to brief the beauty and fitness industries on the details of the policy proposals and to listen to their views and suggestions. Members of the public and the trade may submit their views by email (tdo-review@cedb.gov.hk), fax (2869 4420) or mail (Commerce and Economic Development Bureau, 23/F, West Wing, Central Government Offices, 2 Tim Mei Avenue, Tamar, Hong Kong).