Consumers lost over S$645,000 in prepayments in 2022, beauty industry saw highest losses: Case

CONSUMERS lost more than S$645,000 in prepayments in 2022 because of the sudden closure of businesses, with the beauty industry accounting for the highest amount of losses, followed by the travel industry.

The total amount was a sharp increase of 24 per cent from S$520,000 in 2021, said the Consumers Association of Singapore (Case) in a statement on its annual consumer complaint statistics for 2022 on Friday (Feb 3).

The beauty industry recorded more than S$285,000 in prepayment losses, or 44 per cent of the annual amount. The travel industry came in second with losses of over S$141,000, or 22 per cent of the total.

Prepayment losses in the beauty industry mostly stem from consumers being unable to obtain refunds for prepaid packages bought from beauty salons, aesthetic clinics and spas due to sudden business closure.

The prepayment losses in the travel industry were from sudden closures of travel agencies and the cancellation of advance bookings for flights and hotel accommodation, owing to the Covid-19 pandemic.

Due to the sudden shutdown of small renovation firms, the renovation contractor industry recorded S$49,000 in prepayment losses.

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Case president Melvin Yong said that the association is concerned about the sharp increase in total prepayment losses from 2021 to 2022, especially against the backdrop of economic uncertainty.

“We reiterate our call on the government to consider mandating prepayment protection in industries which collect large sums of prepayment, such as the beauty and renovation contractor industries,” he added.

For the number of consumer complaints, the renovation contractor industry took the top spot, followed by the beauty industry.

Case received 1,454 complaints against home renovation contractors in 2022, a 12 per cent increase from 2021.

More than half of the complaints were related to unsatisfactory workmanship (39 per cent) and delays in project completion (27 per cent) caused by manpower shortages and delays in the supply of renovation materials.

Despite the increase in complaints, the resolution rate improved from 38.7 per cent in 2021 to 47.4 per cent in 2022.

“This is due to concerted efforts by Case to encourage consumers and businesses to participate in mediation as part of the dispute resolution process,” the consumer watchdog said.

The beauty industry saw 1,441 complaints in 2022, a slight increase from the 1,434 complaints in 2021.

About one in four of the complaints was related to pressure sales tactics and misleading and false claims. Gripes about pressure sales tactics include beauty salons not allowing consumers to leave the premises unless they purchase more expensive beauty packages, and carrying out higher-end treatments without consumers’ consent and charging them afterwards.

Misleading and false claim complaints include beauty salons misleading consumers about the efficacy of treatments in curing or alleviating pre-existing ailments.

With the growing popularity of online shopping, Case also saw a corresponding increase in the number of e-commerce complaints.

Disputes with online sellers and e-marketplaces increased to 2,530 in 2022 from 2,206 in 2021. Common complaints include missing items and failed deliveries.

As part of ongoing efforts to strengthen consumer protection in the e-commerce space, Case has launched a Standard Dispute Management Framework to guide e-marketplaces on how to resolve disputes quickly and equitably.

Yong said Case is stepping up efforts to engage more e-marketplaces about adopting the framework.

It will also be launching a new CaseTrust accreditation scheme for e-businesses later this year, which will cover the entire range of e-commerce practices from pre-sale to post-sale, as well as address common consumer pain points when shopping online.

Overall, Case received 15,144 complaints in 2022, a dip from 15,515 complaints in 2021.

The association provided advice to 88 per cent of these consumers on how to resolve the disputes. It also assisted 12 per cent of them in mediation and negotiating with businesses. A total of 65.5 per cent of these cases were resolved, with S$2.1 million (in cash and in kind) recovered for consumers.

Case said it encourages consumers to patronise CaseTrust-accredited businesses, which are committed to fair business practices and consumer-friendly policies. Such businesses are also required to attend mediation with consumers should disputes reach a deadlock.

In 2022, the resolution rate for disputes involving CaseTrust-accredited businesses stood at 76.4 per cent, which was significantly higher than the 65.2 per cent rate for non-accredited businesses.

Businesses accredited under the CaseTrust Renovation scheme and the CaseTrust Spa and Wellness scheme also offer protection for prepayments and deposits.

As at Jan 31, there were more than 1,200 CaseTrust-accredited businesses across the beauty, direct-selling, jewellery, motoring, retail and renovation industries. THE STRAITS TIMES