Public Consultation on Proposed Amendments to the Consumer Protection (Fair Trading) Act ('CPFTA')

1.       Introduction

1.1       The Ministry of Trade and Industry (‘MTI’) is seeking feedback on the proposed amendments to the Consumer Protection (Fair Trading) Act (‘CPFTA’). The public consultation period is from 16 May 2016 to 15 Jun 2016.

2.         About the CPFTA

2.1       The CPFTA was introduced in March 2004 and provides for civil actions which may be taken against the small number of errant retailers who persist in unfair practices. Singapore adopts a balanced approach to consumer protection as overly onerous measures can impose unnecessary costs to businesses which would ultimately be passed on to consumers.

2.2       MTI regularly reviews the Act so that it remains relevant and provides adequate protection for consumers. The last major review took place in 2012, with the introduction of the "Lemon Law" which sets out provisions for consumers to seek recourse for defective goods.

2.3       Current Consumer Protection Landscape

2.3.1   The majority of retailers in Singapore are legitimate businesses who want to serve their customers well. However, there are a small number of errant retailers who persist in unfair practices. The current consumer protection framework encompasses a spectrum of measures to deal with these errant retailers:

(a)  Negotiation: For minor disputes CASE can assist consumers to negotiate with retailers and achieve resolution on the dispute.

(b)  Mediation: CASE can arrange for mediation between dispute parties involved in dispute, through its mediation centre which was set up in 1999.

(c)  Voluntary Compliance Agreement (VCA): As part of the CPFTA, CASE and STB can invite errant retailers to enter into a VCA in which the retailer will agree in writing to stop the unfair practice and compensate affected consumers.

(d)  Injunction: CASE and STB can file injunction applications with the courts against errant retailers who persist in unfair practices. The injunction order issued by the courts will order that the retailer to cease the unfair practice.

(e)  Civil Action: Consumers seeking monetary redress or other remedies can file a claim with the Small Claims Tribunal (SCT) (for amounts of up to $10,000 or $20,000 should both parties agree) or the Courts.

(f)  Criminal Measures: Egregious cases that involve criminal activities are handled by the Police who will investigate and if found guilty prosecute the errant retailers under the Penal Code and the Miscellaneous offences (Public Order and Nuisance) Act.

 

2.3.2   CASE and STB are not empowered under the CPFTA to investigate and take enforcement action against errant retailers.

3.         Proposed legislative changes                                                                                  

3.1       MTI has reviewed the existing consumer protection framework and is proposing two key amendments to ensure adequate protection for consumers and strengthen the current measures that may be taken against the small number of errant retailers who persist in unfair trading practices. 

3.2       Appoint an administering agency

3.2.1   MTI proposes to appoint SPRING Singapore (SPRING), a statutory board under MTI, as the administering agency with investigation and enforcement powers. SPRING would be a suitable agency to administer the CPFTA as its mandate is to oversee the growth of enterprises in Singapore, including aspects of consumer protection such as standards and product safety. The CPFTA currently does not provide any agency or entity with investigation and enforcement powers.

3.2.2   CASE and STB will remain the first points of contact for consumers and tourists, and assist them to obtain redress and/or compensation through negotiation, mediation and/or voluntary compliance agreements. Egregious retailers who persist in unfair practices will be referred to SPRING for further investigations. CASE will continue to play a key role in raising consumers’ awareness of unfair practices and their rights under the CPFTA.

3.2.3   Similar to jurisdictions like Australia and Hong Kong, MTI proposes that SPRING be empowered to gather evidence to file timely injunction ^[1] applications, and ensure that errant retailers comply with the injunction orders. This includes the power to enter into premises under and without warrant, require the production of documents and seize goods. As the appointed administering agency, SPRING may take errant retailers who do not comply with injunction orders to court for contempt of court. Contempt of court is considered a criminal offence. The punishment for contempt of court is imprisonment and/or a fine.

3.3       Courts may impose additional measures on errant retailers as part of injunction orders

3.3.1   Publicise injunction orders. Currently, CASE and STB are able to file injunction applications with the courts against errant retailers who persist in unfair practices. The injunction order issued by the courts will order the retailer to cease the unfair practice. MTI proposes that the courts may additionally require an errant retailer to publicise that it is under injunction. This includes notifying and obtaining written acknowledgement from consumers prior to any consumer transactions to ensure that consumers are aware that the retailer is under an injunction order. The errant retailer may be required to incorporate notices of the injunction order in receipts/invoices issued to consumers.

3.3.2   Notify appointed administering agency of changes. To prevent errant retailers from side-stepping their injunction orders, MTI proposes that the courts may require both the entities and the individuals under injunction orders to notify SPRING, as the appointed administering agency, when there are changes to their entity and/or employment status. The appointed administering agency can then monitor errant retailers’ compliance with injunction orders, and take timely enforcement action if necessary.

a.    Entity: Changes such as premises or number of premises, internet address or number of internet addresses, and/or conversion from a firm/company to a limited liability partnership.

b.    Individual: Changes in employment status, directorship, and/or partnership related to business as a retailer.

3.4       Taken together, the proposed measures will allow for tougher action to be taken against errant retailers and ensure that Singapore remains an attractive shopping destination for locals and tourists.

4.         Impact on consumers and retailers

4.1       The proposed amendments aim to provide greater protection for consumers and enable them to make informed purchasing decisions. Consumers can shop with confidence and be assured that necessary action will be taken against errant retailers.

4.2       Most retailers are legitimate businesses who engage in fair trading practices, which would not be adversely impacted by the changes. The proposed amendments are targeted at the small number of persistent errant retailers who will be subjected to the strengthened measures that may be taken against them.

5.         Responses from industry stakeholders

5.1       The current review commenced in 2015 following feedback from the industry and public for stronger action to be taken against persistent errant retailers. MTI also studied the consumer protection legislation in Australia and Hong Kong which have similar business environments.   

5.2       As part of the review, MTI consulted key industry stakeholders such as the Consumer Association of Singapore (CASE), the Singapore Retailers Association (SRA), Sim Lim Square Management Committee (SLSMC) as well as individual retailers.

5.3       CASE, SRA and SLSMC were supportive of the proposed amendments. They will also work closely with SPRING, as the appointed administering agency, to deal with errant retailers.  MTI has taken in the feedback from these engagements in developing the proposed amendments to the CPFTA.

6.         Invitation to Provide Feedback

6.1       MTI invites interested parties to provide their views and comments on the proposals by 15 Jun 2016. Electronic submission is encouraged. Please use the template in Annex C for your submission and send it to mti_email@mti.gov.sg.

6.2       Please note that all submissions received will be published and attributed to the respective respondents unless they expressly request MTI not to do so. As such, if respondents would like (i) their whole submission or part of it, or (ii) their identity, or both, to be kept confidential, please expressly state so in the submission to MTI. In addition, MTI reserves the right not to publish any submission received where MTI considers it not in the public interest to do so, such as where the submission appears to be libellous or offensive.

6.3       Please note that this draft amendment to the CPFTA is released only for the purpose of consultation and does not represent the final legislation.  All comments received during the consultation exercise will be reviewed thoroughly and, if accepted, will be incorporated into the Bill for introduction in Parliament.

^[1] An injunction is a court order requiring a person or entity to do or cease doing a specific action.  Under the CPFTA, the courts may grant an injunction order restraining a retailer from engaging in a specified unfair practice set out in the Second Schedule of the CPFTA.

Annex A: Frequently Asked Questions

Annex B-1: Proposed Legislative changes

Annex B-2: Draft Bill

Annex C: Template for submission of responses.docx

Annex D-1: Infographic - Key Proposed Amendments to CPFTA

Annex D-2: Infographic - Measures that can be taken against Errant Retailers