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Clampdown on rogue sales staff

By Arthur Chan

Hong Kong, 19 October 2022: A four-year campaign by the Customs and Excise Department to combat aggressive sales tactics at fitness centres appears to have some significant effect. Officers report a huge reduction in consumer complaints, a trend attributed to heightened vigilance plus deterrent penalties being handed down by the courts for offences under the Trade Descriptions Ordinance.

Prison sentences

A recent case, widely reported in the media, saw a salesman at a Mong Kok gym jailed for almost 22 months for coercing a “socially incapacitated” customer into paying HK$900,000 for fitness services. It was both a record amount for an unfair trade practice case in the fitness industry and the heaviest penalty imposed for such an offence.

The District Court heard the victim lost about HK$500,000 in savings and ran up credit card debt of HK$200,000 before being taken to moneylenders to borrow another HK$200,000. To stop him seeking help, he was told he had signed an agreement that prevented him revealing the payments to anyone else. The matter came to light when the man tried to borrow money from his father, who alerted the authorities.

In March last year, six staff members from two gyms in Mong Kok and Yau Ma Tei were jailed for between nine and 20 months by the District Court. A total of eight victims were pressured into providing their bank details to make instant payments for contracts by means of cash, credit card or transfer. In one case, the victim signed contracts worth more than HK$240,000.

Since 2018, Customs officers have carried out a series of operations to combat unfair trade practices in the fitness industry. As a result, complaints from the public have plummeted from 482 in 2019 to just eight in the first eight months of this year.

Medical and beauty services

Gyms are not the only services sector prone to aggressive sales. The Consumer Council received more than 70 complaints last year about promotion tactics at “one-stop shop” medical centres, which would typically offer cheap or free health checks only to sell customers expensive packages during the consultation.

In one case, a man with long-term mental health issues enquired about a promotional check-up and was pressured into paying over HK$150,000 for a 10-month treatment package. On another occasion, an elderly woman was duped into paying HK$88,000 for a package after being coerced by staff to withdraw cash at an ATM machine.

The beauty industry is also affected. Just last month, a saleslady at a Tsim Sha Tsui beauty parlour was jailed for two months at Kowloon City Magistrates’ Courts for coercing a customer into paying more than HK$130,000 for a course of treatment.

What the law says

The Trade Descriptions Ordinance (Cap. 362) was expanded in 2013 to include services, having previously been confined to goods. A salesperson commits an offence of engaging in aggressive commercial practices if harassment, coercion or undue influence is used to impair the consumer’s freedom of choice, thus causing them to make a transactional decision. Such practices include using physical force or exploiting a position of power. The maximum penalty upon conviction is a HK$500,000 fine and imprisonment for five years.

The TDO also covers, among other things: misleading omissions, whereby a salesperson or trader omits important information or makes it unintelligible to the customer; bait advertising, in which products are promoted at a specified price when in fact they will be more expensive; so-called bait and switch, in which a salesperson offers one product with the intention of providing another; and wrongly accepting payment, whereby a salesperson takes the customer’s money knowing they cannot supply the product or will provide a different one.

Summary

Sales staff and traders are reminded to comply with the requirements of the TDO and be mindful of the heavy penalties for offenders. The Customs and Excise Department has reiterated its intention to take strong action, particularly when disadvantaged or vulnerable consumer groups are involved. The general public are advised to buy products and services only from reputable outlets. They may report any suspected violation of the TDO to Customs’ 24-hour hotline 2545 6182.

Arthur Chan is a Senior Associate with BC&C. He deals with Criminal Matters while also covering Civil and Commercial Litigation and handles cases involving personal injury and employment issues. He can be contacted at Arthur@boasecohencollins.com.

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