Scenario 4 - Mediation
Scenario 4 - Mediation
The Summary
A retail chain of beauty businesses was confronted by the Consumers Association of Singapore (“CASE”) for pressure selling tactics which tantamount to unfair practice and in violation of the Consumer Protection (Fair Trading) Act [“CPFTA”].
The owner of the beauty business felt threats of the proposal by CASE in entering a voluntary compliance agreement (“VCA”) under section 8 of the CPFTA to refrain from unfair practice, the terms of the VCA were stringent to the business operations, the adverse media publicity released by CASE, and if resist, CASE’s referral of its observations to the Competition and Consumer Commission of Singapore (“CCCS”) for further investigations. CCCS is empowered under the CPFTA to apply to the Court for a declaration or an injunction against errant businesses in unfair trading practice.
We managed to procure the owner’s comittment to refrain from unfair business practice and to demonstrate to CASE with facts to re-negotiate the terms of the VCA for the ultimate signing of the same by both parties. We also managed to demonstrate that the owner’s next of kin was not the directing mind and will of the business thereby avoided the NOK from the implications of the VCA.
The Backdrop
CASE and the Singapore Tourism Board (“STB”) are the two specified bodies empowered by the CPFTA to invite errant businesses in unfair practice to enter a VCA agreeing to refrain from unfair trade practices; CASE or STB may also refer to CCCS who is empowered to seek a Court declaration that a supplier has (or is about to be) engaged in an unfair practice and/or an injunction against the supplier.
In a press release by CASE in 2019, it was recorded that the beauty industry chalked up the highest number of complaints in 2018. CASE cited the root causes were related to the loss of prepayments due to abrupt business closures, and aggressive sales tactics.
CASE cited the sudden closure of the Traditional Javanese Massage Hut chain saw consumers losing nearly $200,000 in prepaid unutilised sessions though for the prepaid package at the River Valley outlet, the consumers were able to recover from the prepayment insurance of their prepaid but unultised session fees. The recovery was because the said outlet was accredited under the CaseTrust Spa and Wellness scheme.
Another problem cited by CASE for the beauty industry was the aggressive sale tactics in coercing and following consumers to obtain monies for the services, in the consumer’s vulnerable state such as partial undress during the course of the services, the beauty consultants act in concert in making the consumers to sit through relentless promotions of product or services in persistence or with pressure.
In the media release, CASE reminded that it is an unfair practice under the CPFTA to take advantage of a consumer by exerting undue pressure or undue influence on a consumer to enter into a transaction. It is crucial that consumers are aware of this unfair practice and that it is within the consumers’ right to walk away from the transaction.
In the context of the beauty chain business which we assisted between August and October 2019, the owner shared with us that the VCA is analoguous to the stretchable steel band on the forehead of the Monkey King in the Chinese novel, “Journey to the West”.
In this case, we managed to demonstrate that the owner’s next of kin was not the directing mind and will of the business. This clarified the context as opposed to the original terms of the VCA and eventually the said NOK was not implicated by the signing of the VCA. Further, the terms of the VCA were also varied having considered the supporting facts of the same.
The business however, was unable to procure the accreditation under the CaseTrust Spa and Wellness scheme due to the violation of the CPFTA. The owner was advised to try the accreditation submission in the future with demostrable good business practice.
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