Prepayment consumption - "pay now, enjoy later" - is increasingly common in many sectors of the retail trade. Does it necessarily work to the advantage and benefit of the consumers?
Prepaid coupons, vouchers or stored-value cards and the like generally offer price discount as an incentive for bulk purchase of a quantity of units which consumers can redeem later.
That's the benefit but it doesn't come with no strings attached. There are restrictions in their usage which consumers may find unfair or misleading.
As reflected in some complaint cases brought to the Consumer Council for redress, such restrictions may take many forms which consumers may not foresee.
Case One. The complainant originally agreed to buy 10 coupons for 10 health drinks of $18 each, with the balance of any purchase exceeding the $18 unit price to be paid in cash. She ended up being persuaded to convert those into e-coupons and store them in her electronic membership stored-value card for easy management.
Later when she bought 2 bottles of a beverage of $21 each, and tried to pay with the card and the balance of $6 in cash, she was told the balance had to be settled also electronically by the card. As there was insufficient fund, she had to add value, which reluctantly she agreed. But, to her utter surprise, the amount for each add-value was a minimum $100.
According to the complainant, she was never told about such restriction nor the minimum add-value rule. She felt entrapped into continued usage of the card and when she asked to cancel her card, a further service fee of $50 was demanded of her.
In her opinion, the company had failed to properly inform its customers of the important terms and conditions in the card usage, in violation of the new offence of "Misleading Omissions", under the amended Trade Descriptions Ordinance. Upon her request, the case was referred to the Customs and Excise Department for possible follow-up action.
Case Two. A newly-wed who bought 100 cake coupons of $50 each, tried to redeem one coupon for an assortment of pastry: one French baguette ($16), one Swiss roll ($12), one cheese bun ($15) and one sausage bun ($7.5), worth a total of $50.5.
He was told the price discounted merchandise was for sale to cash paying customers only, and if he wanted to use a coupon, the original price would apply i.e. the French baguette at $20, and the Swiss roll $16.
The complainant found it hard to comprehend why the coupon which he paid for with $50 in cash and in advance could not be used now to redeem the same value of food as in cash purchase.
In his opinion, the company had engaged in unfair trade practice, using price discounts to lure customers into buying large quantities of coupons, but by allegedly raising the prices and disallowing purchase with coupons of reduced price items, effectively deprived coupon holders of the benefits of price discounts offered in the first place.
Case Three. The complainant bought 3 gift vouchers of $100 each with a validity period of 12 months from the date of issue i.e. 10 March 2013. When he tried to redeem the vouchers this year on March 10, he was told the vouchers had passed their expiry date - one day behind.
He disagreed noting that the vouchers only stated a 12-month validity period but had not clearly specified if it counted the date of issue. The company contended that the validity period commenced from the date of issue for 365 days or 366 days in a leap year, and up to and including 9 March 2014 only.
Consumers should therefore be wary of restrictions which may or may not be stated on prepayment vouchers, coupons or the like. Sellers, on the other hand, should disclose information clearly to avoid possible contravention of the TDO on unfair trading.
For more information and detailed guidance, consumers are advised to refer to the report in this (May) issue of CHOICE
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- 2014.05.15