"Pay first, enjoy later" mode of consumption may backfire - CHOICE # 336 (October 15, 2004)
Prepayment consumption is a fast growth enterprise.
No longer is it confined to merely coupons for cake shops, beauty services and the like, but is branching out into all trades with innovative schemes designed to make you part with your precious money first, and deliver the goods or services later.
The Consumer Council has received, in the first eight months of this year, a total of 975 cases of complaints related to prepayment consumption involving a staggering nearly $10 million. This compared with 1,253 cases involving $10,826,647 for the whole of last year.
Among the categories with the most complaints were: beauty centres (322 cases), time-sharing schemes (186 cases), health clubs (181 cases), hotel dining membership (121 cases). Together they accounted for 810 cases (out of 975 cases) involving $9,386,388 (out of $9,974,049).
While the Consumer Council has no strong objection to the prepayment mode of business operation, it is of the view that consumers should be aware of the fact that there is no existing legislation regulating prepayment consumption operation, except through legal action for recovery of debt in the event of default.
Consumers are liable to run the risk of substantial financial loss in the event of closure of the business. They are advised to balance between the benefit and the risk involved in prepayment in addition to taking into account the quality of the goods and service to be delivered, the reliability of the company concerned, and their own individual needs.
Highlighted in this issue of CHOICE are four cases involving hotel dining, physiotherapy, beauty and slimming service, and hair salon, to heighten consumer awareness in prepayment consumption.
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