Customs crack down on beauty, fitness sales tactics with new proposal

The beauty and fitness industries are being spotlighted as the government launches a public consultation on amending the  Trade Description Ordinance regarding pre-payment consumption.

Sudden closure of large fitness chains and beauty groups

is being cited as a primary reason for the assessment.

The proposed amendments will seek to provide a framework for duration of contracts, refunds and opt-out mechanisms for consumers after they've signed contracts.

The government is launching a two-month public consultation on policy proposals relating to the Trade Descriptions Ordinance with the aim to further protect consumers engaging fitness and beauty services.

Sudden closure of beauty and fitness establishments have triggered financial losses for many consumers who engage in pre-payment services, prompting the proposed amendment.

In a statement, the government details that "unfair trade practices" such as "improper selling tactics" and pre-payment schemes pose "considerable risks" to consumers.

The proposal seeks to introduce guardrails to protect consumers from entering long contracts and substantial pre-payment plans while being subjected to aggressive, high-pressure selling tactics, practices the government says are highly concentrated in the two industries. 

The statement also reveals beauty and fitness establishments account for half of all consumer complaints relating to incorrect payment charges.

As such, the government is putting forth three policy proposals targeting sales and contracts.

First, it introduces a statutory seven-day cooling-off period and a 14-day refund window for prepaid service contracts.

Second, prepaid contracts will be capped at 24 months, while those that take effect more than three months after signing will be banned.

Finally, the amendment seeks to add the offence of wrongly accepting payment to Schedule 1 of the Organized and Serious Crimes Ordinance.

This will grant the Customs and Excise Department broader investigative and enforcement bandwidth to tackle these cases.

The government will be briefing the industries and taking up suggestions to refine the proposal over the next two months.