Credit cards were used often to settle large payments in consumer transactions allegedly involving undesirable sale practices.
In 2008, the Consumer Council received 222 cases of complaint against the trade practices of beauty service, direct selling and modelling agencies.
In 10% of these complaints credit cards were used for payment involving tens of thousands of dollars.
Highlighted in this issue of CHOICE were 3 typical complaint cases.
Case 1 - The complainant was enticed by a magazine advert, and attended a "fat-reduction" treatment at a special promotional price of $88. In the course of it, she was persuaded to purchase a set of coupons for follow-ups. Initially she refused but later agreed succumbing to the pressure of persistent persuasion. She signed her credit card for $36,000 for 25 sessions.
No sooner had the programme started, she was recommended to join a Chinese acupuncture therapy to which she consented and again used her credit card to sign for the payment of $40,000.
But that's not the end, incredibly, she was asked to take on an additional beauty maintenance treatment at a cost of $50,000. As she had already reached her credit card limit, she could only use it to sign for $10,000, then borrowed $10,000 from a financial company, and owed the beauty centre the balance of $30,000.
Unsurprisingly, she regretted later and complained to the Council as the beauty centre turned down any request for refund.
Case 2 - The complainant attended an introductory talk of a direct selling company and was much excited about the prospect of a new career and a fortune ahead. He quit his job and borrowed $200,000 with his credit card and from a financial company to pay for the joining fee and a quantity of products.
But all too soon he found the products to be so high in price as to elicit any interest in the market. With no sales and income, he also had to face debt collection agent demanding repayment of his credit card loan.
He felted he was the victim of deception, and sought the assistance of the Council in revoking the contract and refunding the money. But the company would not respond. The case was subsequently referred to the Police to investigate if there was any criminal involvement.
Case 3 - The complainant was approached in the street by someone claiming to be a representative of a fashions company, and offering her a part-time modelling job. She was taken to the company for an audition whereupon she was told that her modelling fee would be $100 an hour.
During the meeting, she was advised to take make-up lessons at her own expenses and was taken to a beauty centre where she was recommended to join a skin care treatment at $30,000 for 100 sessions.
After much persuasion, the complainant used her 2 credit cards to pay for the treatment. Later she was assigned to a modelling job and received her fee of $100.
But since then she had received no further assignments. She felt cheated and reported the matter to the Council which found that the beauty centre had already changed ownership with little hope of a refund.
These complaints clearly showed that consumers should exercise the utmost prudence and avoid signing credit cards for goods or services on the spur of a moment or under conditions of duress.
In the interest of consumer protection and to enhance consumer confidence, the Consumer Council is recommending and appealing to businesses to introduce a cooling-off period clause in their sales contracts.
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