Motorcar, fitness club sectors among most notorious in losses incurred by consumers due to closures: Case

THE motorcar industry has the highest amount of prepayment losses incurred by consumers when businesses close down, the Consumers Association of Singapore (Case) said on Monday.

The sector alone accounted for some S$2.74 million in reported losses from January 2014 to June 2017. It is followed by the fitness club industry at S$1.39 million, renovation contractor industry at S$1.02 million, travel industry at S$860,000, hair industry at S$700,000 and furniture industry at S$620,000.

This could just be the tip of the iceberg, since not all affected consumers lodged complaints with Case. For example, when fitness chain California Fitness ceased operations in 2015, Case received about 600 consumer complaints with about S$1.09 million of reported losses. This represents a small fraction of the 27,000 members who were owed S$20.8 million in unused gym access and personal training sessions as reported by the liquidators.

The amount of prepayment losses in Singapore has been rising at an "alarming" rate since January 2014, when it stood at S$1.05 million. The amount ballooned to S$1.90 million in 2015, S$3.59 million in 2016 and S$1.81 million in the first half of 2017.

"Consumers should be extra vigilant and do their due diligence when transacting with businesses in these industries," Lim Biow Chuan, president of Case, said.

Overall, more than 2,000 complaints from consumers who reported losses of about S$8.35 million arising from these business closures have been received by Case.

The association warned that the risk of business insolvency may increase with the current uncertain economic outlook, and urged consumers to be more aware of the risks involved when making advance payments to businesses.