18 October 2019
Consumer Council chief Prof. Wong Yuk-shan (center) believes a mandatory cooling-off period on service contacts will be in the interests of consumers and society at large. Photo: HKEJ
Consumer Council chief Prof. Wong Yuk-shan (center) believes a mandatory cooling-off period on service contacts will be in the interests of consumers and society at large. Photo: HKEJ

Consumer body supports ‘cooling-off period’ on service contracts

Hong Kong’s consumer watchdog is calling for legislation that would require service providers to include a cooling-off period clause in the contracts they sign with their customers, noting that such an initiative will help people who might rethink their decisions after large purchases.

In 2010, the government published a consultation paper on combating unfair trade practices, in which a proposal to provide mandatory cooling-off periods was included. However, the clause didn’t make it into the Trade Descriptions amendment bill 2012 due to concerns raised by the business sector.

A cooling-off period will give people the power to cancel their purchases or pricey long-term contracts within a set time after they sign up for deals.

Such right has been a long-standing demand of consumer activists who point out that buyers often regret decisions made under impulse or due to high-pressure sales tactics and would want to have the power to withdraw from the deals.  

On Thursday, the Consumer Council said it will support any move by the government to make it mandatory, through legislation, for service providers to incorporate the so-called cooling-off period clause in new contracts with customers.  

Releasing a study, the watchdog said a rise in complaints on unfair trade practices has convinced the agency that a mandatory cooling-off period in service contracts is essential, especially when it comes to deals related to beauty parlors, fitness centers and timeshare firms.

According to the Consumer Council, it received about 10,000 complaints against the three business segments between 2013 and 2017.

There were nearly 6,000 complaints in relation to the beauty industry, 3,790 complaints on the fitness industry and 185 over the timeshare industry.

The money involved in such deals in the three industries is said to have amounted to around HK$65 million, HK$57.5 million and HK$7.26 million respectively.

As such, the Council believes a cooling-off period will a useful tool to safeguard consumers’ rights and interests by allowing them to cancel a purchase unilaterally and seek refund within a reasonable period of time after the conclusion of a contract.

As there is no need to prove any wrongdoings on the part of the trader, the cancellation right will enhance consumer protection in situations where unscrupulous and high-pressure sales tactics were deployed.

Also, such clause can serve as a deterrent to traders or their representatives who have the intention to or habitually engage in such tactics, the Council said, the Hong Kong Economic Journal reports.

Besides asking the government to require the three industries to implement the cooling-off period, the watchdog also recommended imposing the clause for two types of consumer transactions, namely contracts involving goods and/or services with a duration of not less than six months and transactions concluded during unsolicited visits to consumers’ homes or places of work.

At the same time, the Council said it deems it inappropriate to apply a cooling-off period to contracts that involve spending of less than HK$500, online shopping, one-off fitness services or beauty services that specify a service provided date, as well as financial services and property transactions.

As to why the cooling-off period should be no less than seven days, the watchdog explained that it was a suggestion made after considering the systems in place in other countries. It noted that the UK provides for a 14-day cooling-off period, while in Australia it is 10 working days and in the US it is three working days.

Council chairman Professor Wong Yuk-shan believes the proposal will win support from various sectors of society.

Asked why online shopping is sought to be excluded from the ambit of the proposed clause, he said there haven’t been many serious complaints about the segment so far, and also pointed out that it would be difficult for law enforcement as many e-commerce websites are located overseas.

Several political groups have welcomed the Council’s suggestion, but Democratic Party lawmaker Andrew Wan Siu-kin pointed out that mandatory cooling-off period may not be deterrent enough if businesses can’t be held criminally liable for malpractices.

Nelson Ip Sai-hung, founding chairman of the Federation of Beauty Industry (H.K.), said he opposes introduction of a mandatory cooling-off period.

The provision will only add to the operating costs for the city’s small-size beauty parlors and increase their workload, he said.

– Contact us at [email protected]