Debated in Parliament on 3 Feb 2020.
Assoc Prof Walter Theseira asked the Minister for Trade and Industry (a) for each of the last three years, what is the total value of consumer prepayments for services or products that have been lost due to business failure or inability to discharge contractual obligations, broken down by (i) the motor car industry (ii) the beauty industry (iii) contractors and (iv) any other industries with significant consumer prepayment losses; and (b) whether mandatory escrow can be implemented for higher-risk consumer prepayments to protect consumers against such losses.
Based on reports filed by consumers with the Consumers Association of Singapore (CASE) from 2017 to 2019, the value of reported prepayment loss can be attributed mainly to motor cars, renovation services, and beauty services. The breakdown of the reported loss in these three areas can be found in Table 1.
Escrow arrangements have been implemented for some services like conveyancing services and major payment services. However, such arrangements may not be suitable for all businesses. Some use prepayments to facilitate the cashflow of their business operations to allow them to offer more competitive pricing to their customers.
To help consumers identify businesses with good trading practices and shop with peace of mind, CASE has worked with industry associations to develop CaseTrust accreditation schemes for specific industries. In particular, the CaseTrust schemes for motor cars, renovation services, and beauty services require accredited businesses to safeguard consumers' prepayment through the purchase of insurance or insurance bonds.
The Government will continue to monitor developments and consider additional sector-specific prepayment protection requirements as necessary, taking into consideration the cost impact on businesses and consumers.
PAPERCUTS