Wellness Industry In Singapore
What can be done to protect consumers when they buy packages involving installments?
More consumers are left high and dry from the closure of Wax in the City in a recent series that has hit the beauty and wellness industry.
In a CNA report, Seah Seng Choon, executive director, Consumers Association Of Singapore, said: This pre-payment packages arrangement is totally unregulated and customers need to understand that. They need to be mindful of this and take steps to protect their interests for the time being. There are several disadvantages for consumers to sign up for packages.” Do you think more can be done to protect consumers? Share your views with us.
Ah, yes. This is a problem everywhere, not just Singapore. However, the term technically is wrong: it’s prepayment, not installments.
(If you paid via credit card, then pay credit card via installments, that is between you and the bank, not between you and the business. You agreed to BORROW the amount from the bank, to pay the business, then pay the bank back in installments.)
The basic pattern is simple: the store try to tempt you into prepaying for a a service that you will use repeatedly by offering discount if you pre-pay. For example, with the case, Wax in the City, it sounds like you prepay for like 10 visits and they give you what? 20% discount? (I am just guessing) Then they go out of business before you can use up all 10 visits, and you can’t get a refund for the portions you cannot use. Then the owner open up a new business, in the same line of business, probably through a friend/relative as the figurehead owner, and do the same thing again.
If it was indeed paid in installments, things would be simple: you simply stop the installment payments. Alas, everything was already paid, and refunds are difficult, or downright impossible.
Protection is possible, but requires some legislative changes, and more due diligence by the consumer.
1) Contemplate forcing each business to put up a bond, or performance insurance, as a requirement for its business license. That way, if the business goes under, there is at least SOME money left to pay the creditors (i.e. customers) Or you can make it optional, but participation gives the business right to display a special seal, such as American Better Business Bureau “approved business”, in their advertisements.
2) On a similar vein, require all businesses in the same line of work to contribute to a fraud compensation fund, which basically means government run insurance, similar to the way American FDIC insures all bank deposits by charging banks a fee based on the amount deposited. This would require periodic audit of the books. You will also need to tie this to the business license, and require disclosure of their coverage on the receipt, which must be submitted and audited periodically to make sure they are not underreporting the revenue. Only pre-payments must be recorded this way. Regular customers who pay cash are not covered by this.
3) Above coverage is OPTIONAL. A business can choose NOT to participate, but then if they falsely claim that they are covered, they will be sued and forced out of business.
4) Add a business tax for the industry to educate consumers about this coverage, if it passes. Consumers will have to learn about this “seal” or program
5) Consumer need to be able to look up online or via an automated phone system, by punching in a business license number, if the company is covered or not. (or SMS, or even live person, many possibilities) Each branch would probably need separate code to make sure nobody is pretending to be somebody else.
6) Regulators must have power to trace ownership to prevent “whack-a-mole” (American game where you use a soft hammer to “whack” pop-up targets).
7) In Caifornia, US, all “sellers of travel” are required to have escrow accounts, and must put money into escrow if people are buying travel worth $250 or more. May want to look into that program.
—
Kasey C, PC guru since Apple II days
All generalizations are false, including this one.
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