Penalties for Dishonest Retailers

Mr Lim Biow Chuan asked the Minister for Trade and Industry whether the Consumer Protection (Fair Trading) Act can be amended to allow a specified body to take up criminal prosecution against errant traders and their directors or proprietors for breaches of the Act.

Er Dr Lee Bee Wah asked the Minister for Trade and Industry in light of complaints against dishonest retailers in Sim Lim Square (a) whether the Ministry will consider enhancing the penalties against such business practices under the Consumer Protection (Fair Trading) Act; (b) whether joint action by the Ministry and the police will be taken against these businesses; and (c) what other recourse is there for consumers who have been cheated apart from reporting to the Consumers Association of Singapore (CASE).

Ms Denise Phua Lay Peng asked the Minister for Trade and Industry in light of the highly publicised cases involving a mobile phone retailer in Sim Lim Square and two tourists (a) what are the options available and what steps will the Ministry take against these errant retailers; and (b) what will the Ministry do to reduce similar incidents of unfair and bullying business tactics applied by errant traders, especially on tourists, in Singapore.

Ms Irene Ng Phek Hoong asked the Minister for Trade and Industry (a) whether the bad publicity arising from errant retailers in Sim Lim Square has affected the international reputation of Singapore as a tourist destination and shopping hub and, if so, how; (b) what stern actions can be taken against such retailers promptly when reported; (c) whether the existing laws are adequate to protect consumers against such errant retailers; and (d) whether there are mechanisms to check or ban errant retailers from setting up shop under different names.

Mrs Lina Chiam asked the Minister for Trade and Industry (a) whether the Ministry keeps track of consumer complaints received by CASE; (b) if so, what is the total number of CASE complaints received in the last 10 years against errant retailers at Sim Lim Square, Lucky Plaza and People's Park Centre; (c) what is the total number of successful remedies accorded to consumers against errant retailers at the three shopping malls for defective goods covered under the Consumer Protection (Fair Trading) Act; and (d) whether the Ministry will consider publishing a blacklist of recalcitrant retailers at airports and major commercial hubs.

Mr Hri Kumar Nair asked the Minister for Trade and Industry whether the Ministry will consider establishing a consumer protection agency to investigate and enforce consumer protection laws in Singapore.

Mr Yee Jenn Jong asked the Minister for Trade and Industry whether the Government will consider legislation or regulations to give more teeth to Government agencies and management corporations of retail spaces to tackle errant retailers.

The Government's approach to consumer protection is based on promoting fair trading among retailers and helping consumers to make informed purchasing decisions. This approach has benefited consumers and businesses, as the vast majority of our retailers are legitimate businesses who want to serve their customers well and have also established practices to resolve consumer complaints.

Unfortunately, there is a small number of errant retailers who engage in unfair trading practices to take advantage of their customers, both local consumers and tourists. We need

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to take action against such retailers who affect consumer confidence and dent Singapore's reputation.

Currently, the majority of consumer complaints are handled by CASE and are resolved through discussion or mediation between the parties, or by consumers going to the Small Claims Tribunal (SCT) to seek financial compensation and, over the past three years, CASE has received about 2,000 complaints against retailers in Sim Lim Square, Lucky Plaza and People's Park Centre. So, 2,000 complaints in Sim Lim Square, Lucky Plaza and People's Park Centre; only three of the malls. CASE has followed up on these complaints and mediated 1,400 cases.

The Government will work with CASE and SCT to streamline the existing claims process so that quicker action is taken to help consumers obtain compensation. We will also review the relevant legislation to strengthen the enforceability of rulings by SCT.

And civil cases, including recent incidents involving some retailers at Sim Lim Square, will be investigated by the Police under the Penal Code. Retailers who are found to have engaged in activities involving cheating, fraud or intimidation will face criminal prosecution in Court.

CASE and the Singapore Tourism Board (STB) are empowered under the Consumer Protection (Fair Trading) Act (CPFTA) to seek injunction orders against errant retailers through the Courts.

The Government will review the legislation to strengthen the provisions so that quicker action can be taken to deter unfair trading practices and prevent errant retailers from side-stepping the restrictions under the CPFTA by forming new companies. We will study the option of appointing an agency to undertake the investigation and enforcement functions. So, as part of the review, we will study the best practices and experiences of other jurisdictions, including Hong Kong and Australia, and conduct further consultation with stakeholders.

We will conclude the review and move the necessary amendments this year. While I caution that whilst we are trying to strengthen the law, putting in harsh penalties, we have to strike a balance between the consumer and the businesses as well. We do not want it to affect unnecessarily the good on the majority of the retailers, some of whom are very micro enterprises or merchants in the heartlands.

It is not necessary to put up displays at Changi Airport, as this would give visitors the wrong impression because the vast majority of retailers in Singapore are bona fide. They are

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good retailers. It is also more appropriate to tackle these issues at the local level. For example, CASE and STB have been working with Sim Lim Square's Management Council to provide the public with more information about complaints against specific retailers. The Management Council is also looking at ways to enhance their landlord's tenancy agreements and raise service standards of retailers at Sim Lim Square, in consultation with CASE. I meet with them periodically to find out about the progress in Sim Lim Square.

Improving consumer protection and protecting fair trading require the collective efforts of the Government, CASE, consumers and industry players. In reviewing the legislation, MTI will take a balanced approach to protect the interests of consumers. MTI will continue to work with CASE and industry players to step up consumer education efforts, to enhance consumers' awareness of their rights and help them make informed buying decisions.

Mdm Speaker, if I may just declare my interest in this matter as the President of CASE. May I ask the Minister of State: currently, the Police seem to be very reluctant to follow up on some of these complaints lodged by consumers or tourists to investigate. What happens now is that the Police refer all such complaints to CASE. As the Sim Lim Square saga has shown, some of the acts of the errant retailers are quite criminal in nature, in the sense that they charge for "unlocking fee" and "in-house insurance".

Until the review is completed, can I ask the Minister of State what other actions can we undertake to protect consumers? What we do not want is a repeat of a similar situation like the Sim Lim Square saga. The Minister of State said that the review is likely to be completed at the end of the year. For the next 10 to 11 months, what kind of protection can be afforded to consumers or tourists alike?

I did not say "end of the year". It will be earlier than end of the year. It will be within the year. We are already halfway through the review. We intend to expedite this and complete it as soon as possible. Because every day, there are buying decisions, selling decisions and practices. We have to ensure fair practice.

On the issue of the Police, there must be a process where, first, we must create enough awareness and heighten awareness about the errant retailers within the mall. We have to work with the mall very closely to do that. Secondly, timely engagement when something happens. So, that is when you need CASE and for the mall and CASE to work together to monitor all these different complaints. There may be more complaints for one shop, or maybe it is complaints about several shops. We have to address this. So, engagement is extremely important. Once you have engaged them, you need to gather evidence – whether there are elements of fraud or more severe elements of intent where you know that there may be criminalities involved. That is where the Police can be involved to gather further evidence under the Penal Code, to say what else and what other action we can undertake.

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There must be a proper process.

That is exactly why we are looking into these different areas – education, case process, timely enforcement and engagement, where something needs to be coordinated. We are thinking about looking at additional resources, whether in the form of a unit or an agency, or an existing current organisation. We are figuring out what is the best way to do it efficiently and effectively to coordinate this effort. Then, we can address the issue completely.

I would like to thank the Minister of State for the reply. While I agree that, yes, we need to take a look at the processes, I am glad that the Ministry is doing the review now. May I ask a few supplementary questions? One, who is doing the review; who is the review committee? Two, how is the review being done now? Three, the Minister of State mentioned earlier on that the review could be completed by the end of the year and now he says it would be earlier. So, when will the review be completed? Four, will there be a public consultation when the Ministry does this review? I think consumers are looking at this very closely.

This is a matter of urgency. We do not have to set up a committee to review an issue. Immediately, we pulled all the stakeholders in and we started working on it. Those involved include inter-Ministries in the Government – MHA, MinLaw as well, AGC and the mall operators in getting their feedback. We have involved CASE as well. Mr Lim Biow Chuan himself is personally involved. I have just mentioned all these stakeholders in the review.

For the question on when, it definitely will not be at the end of the year. I do not foresee that we will complete this review too late. I will set a target that before the middle of this year, we want to finish the whole review and also recommend the amendments. As for public consultation, definitely. In order to make amendments to the Act, we need to consult not just with CASE but also with the merchants and with the mall operators as well so that you can get greater acceptance before you can recommend any amendments.

Mdm Speaker, I would like to congratulate the Minister of State on his ability to count, at least until 23. Supplementary questions – I appreciate that he is thinking of setting up the agency and I fully support the setting up of that agency. Is the Ministry thinking of criminalising certain breaches of consumer contracts? And what is the scope of the agency? Is it likely to govern all consumer contracts or just certain kinds of consumer contracts?

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I thank the Member. I can count from one to 15 as well. For the query on criminalising, it is not about the contract but the Consumer Protection (Fair Trading) Act and whether we put criminal penalties within the Act and whether these are severe enough, whether we can define the severity and whether we want to do that. We are still considering because one of the important points of consideration is how would it affect the merchants and businesses. You do not want it to open up so much such that in any small little case, it will all come up. And then the Police and every investigation officer would gather evidence and this would affect the business operations as a whole. The majority who are good retailers will be affected as well.

So, that is under our consideration right now. As to the scope of it, as you know, the CPFTA covers all things you buy and sell in the retail sector. We are not just talking about selling electronics but every other thing. So, we have to consider it very carefully. If we want to bring in harsh penalties, what would that mean? The question would be, if we put an injunction through, and that injunction happens to be there and we publicise it, it is against the entity. Today, we already foresee that the operator himself can side-step the matter and form another entity. That is something we are considering very carefully – to look at injunctions that effectively cover the whole scope that he would not be able to set up any entity.

Madam, the Minister of State mentioned enforcement. I agree that is the key to eradicating unethical sales practices. I would like to ask the Minister of State whether we could consider letting the enforcement officers come in, disguised as a mystery shopper, so that they can do some form of audit or check on some of the retailers that you receive numerous complaints about. We have to be proactive in some operations to see whether they are cases of unfair practices or misleading sales practices. So, whether some of these enforcement officers, when they receive information, can take immediate action?

I believe with my own sense that it is part of the investigation and evidence-gathering process, where you do something like a mystery shopper kind of work to gather evidence. On whether it is necessary to do so, first, you have to decide if this problem or complaint has the element that raises a reasonable doubt that something needs to be done further, we need to gather more information. That is when we can carry out these mystery shopper tests. But I would also encourage the mall operators to work with the retailers. At times, they also need to do these mystery shopping tests to assess their service levels. This is something that they may want to do and not necessarily just to detect whether there is fraud or not. So, depending on the case and how severe the case and the complaint are. I believe as part of the investigation process, there may be enforcement officers going down to gather evidence in different ways. That could come later, as we discuss about the

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whole process.

First, I want to commend the Minister of State for not just his ability to count but really doing very good work on the ground. My merchants at Sim Lim Square have given very good feedback. So, congratulations for that. The Minister of State had mentioned that the proposed legislation will be completed in the middle of this year. But that leaves at least a few more months. I am wondering if the Minister of State could consider some interim measures for the next few months, before the proposed legislation is out. Perhaps, Police presence in civilian attire so that victims can report very easily at the focus areas you mentioned – People's Park, Sim Lim Square and Lucky Plaza. Implementing some of these interim measures will be in order.

Absolutely. We have to do something right now in the interim before we complete the study. Even after we have completed the study and making the recommendations and amendments, it would take time. So, right now, we are working closely with the affected malls, the operators. We are working with Sim Lim Square and the Management Council very closely. They are implementing certain measures within the mall, firstly, contractual obligations between the landlord or the shop-owners as well as the tenants. There are some clauses in the agreements. This was recommended by CASE: putting a clause there to make sure there is compliance with CPFTA.

Secondly, we also want to heighten awareness about those errant retailers within the malls. We want to make sure that there is a wider spread. We are working with CASE to do that, to engage all the mall operators as well as retailers in proper education and proper training.

We are also trying to look at all the complaints, monitor the complaints and where are they coming up from. Each year, we are getting an average of about 4,000 complaints. If we are getting that kind of complaints – and the tourists, on average, make up about 15% or so of the complaints – then, there is an issue where we are not just having to manage local consumers, but looking at making sure that the tourists will continue to come and we would not dent our own reputation. In the mean time, CASE will play a critical role in education, in working with the malls to do that. MTI is engaging the malls to make sure that, on the policy side, we are looking at the relevant policies and laws, to see what are the other things that we can do.

The Police are definitely involved, but I think there is going to be a first line and second line of response. In the first line, it is very important that we have the data and the information and the complaints and that these statistics and information are available and sufficient and enough for it to be assessed that there is an issue. If there is an issue and an element of criminality, that is when we will escalate to the Police to look at the case and

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gather further evidence. That is how the Police will be involved. Each time there is an issue, say something happens in a shop and CASE is involved, then, there will be an engagement officer from CASE or somebody, to talk to retailers. There is a process to help the consumers to make their complaint. When they go to CASE, they have two choices. One, is mediation, where CASE can advise them or recommend, depending on their case, that they go to the Small Claims Tribunal to make their claims.