Droit des Sociétés et Droit Commercial

Does Hong Kong need more protective consumer legislation in respect of Fitness Centres and Beauty Salons?

Nowadays walking past a Hong Kong Fitness Centre or Beauty Salon puts you at risk of encountering a salesperson, aggressively selling memberships or beauty treatments.

However, did you ever wonder whether such sales techniques are actually a breach of the law and does not current Hong Kong law already provide adequate protection for consumers interested in such products/services?

Separately, is there still a need for a statutory cooling-off period to protect consumers?

Hong Kong Current Law – Trade Descriptions (Amendment) Ordinance

Current consumer protection is provided in part through the Trade Descriptions (Unfair Trade Practices)(“Amendment Ordinance”) which amended the Trade Descriptions Ordinance (Cap 362) and which now expressly prohibits six specific “trade practices”.

Those six trade practices are now express offences under the Amendment Ordinance, being (1) false trade descriptions of services, (2) misleading omissions, (3) aggressive commercial practices (ie the aggressive sales techniques referred to above), (4) bait advertising, (5) bait-and-switch, and (6) wrongly accepting payment.

Enforcement of the Amendment Ordinance is through the Hong Kong Consumer Council, with whom a consumer may lodge a complaint. So it is the Consumer Council that decides whether or not to take legal action against an offending business.

If a business is found guilty of engaging in any one of these six trade practices, it may be subject to criminal sanctions; on conviction on indictment, with fines of $500,000 and imprisonment of 5 years. On a summary conviction, fines of $100,000 and imprisonment of 2 years may be imposed.

In addition to the consumer protection through the Hong Kong Consumer Council, consumers could choose to institute a private action based on contract law or tort, although costs may be prohibitive.

Protection of Consumers under the Amendment Ordinance

The Consumer Council does provide consumers with a practical channel to take action against Fitness Centres and Beauty Salons, as shown below:

In April 2016, California Fitness was publicly named and criticized by the Consumer Council for aggressive sales practices deployed in the sale of gym memberships and services to consumers, such practices being deemed intimidating, pressuring and misleading consumers into signing for such memberships, while failing to explain key contractual terms during the sale process, often involving long-term contracts valued at tens of thousands of dollars.

California Fitness itself continued to receive an increasingly large number of complaints from consumers (227 in 2013, 296 in 2015), representing over half the number of total complaints against Fitness Centres in 2015 (577) before it went out of business last year.

In another instance, staff of a Beauty Salon were convicted for engaging in aggressive commercial practices, after having continuously pressured a consumer for one and a half hours, urging that customer, on the basis that there were lumps on the consumer’s chest, to purchase a body treatment package of HK$140,000. The customer yielded despite initially expressing reluctance.

In a third case, a Beauty Salon director and sales manager were given a suspended sentence for misleading customers into believing that the customers would be obtaining a diploma from an Australian vocational institution, although that vocational institution no longer had the right to issue the qualification. The director and sales manager were found liable for engaging in a commercial practice that was a misleading omission.

The particular problem with Fitness Centres and Beauty Salons

Despite the implementation of the Amendment Ordinance, there is still evidence that some Fitness Centres and Beauty Salons breach the Amendment Ordinance by engaging in one or more of the six above prohibited trade practices.

Statistics recently published by the Consumer Council show that the number of consumer complaints against Fitness Centres and Beauty Salons for engaging in these six trade practices continue to rise year on year.

Additionally, statistics from the Hong Kong Customs and Excise Department, show that the number of complaints against Fitness Centres between January and March 2015 was substantially less than in the period between January and March 2016. Similarly, the number of complaints against Beauty Salons during the period between January and March 2015 was far less than in the period between January and March 2016.

Does Current Legislation Adequately Protect Consumers dealing with Fitness Centres and or Beauty Salons?

Hong Kong’s current consumer protection legislation is consistent with the United Nations Guidelines for Consumer Protection, as it provides consumers with a channel, the Consumer Council, to take action against any businesses who are in breach of the provisions of the Amendment Ordinance.

However, even the Consumer Council agrees that aggressive sales practices, and other potentially “unfair trade practices” still remain widespread, especially in relation to Fitness Centres and Beauty Salons.

Lawmakers have long pushed for a statutory cooling-off period, allowing consumers who have been allegedly ‘forced’ into signing contracts to cancel such contracts and get their money back. Cooling-off periods were discussed by LegCo as long ago as 2007, when proposals were made to align Hong Kong’s statutory consumer protection with that of the European Union and the United States.

Statutory cooling-off periods were further debated by LegCo in 2011, and the Consumer Council made suggestions to the Fitness Centre industry last year about self-regulation.

There does remain strong support from lawmakers for statutory cooling-off periods to be implemented for the protection of consumers. In May last year, a motion was passed by the LegCo Panel of Economic Development to “urge the Government to introduce legislation on the imposition of mandatory cooling-off periods, and accord priority to implementing a statutory cooling-off period for pre-paid services involving a lot of complaints and large amount of payment, such as those provided by Fitness Centres and Beauty Salons.”

However, despite the above motion, the Government has failed to take any definitive action, stating that more deliberation and research is required before any action is taken.

Is it not now time for some action to be taken, rather than more deliberations? Should there not now be the implementation of a statutory cooling-off period?

This article is for information purposes only. Its contents do not constitute legal advice and readers should not regard this article as a substitute for detailed advice in individual instances.