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Op-Ed

2012/07/04

Catch-all law on sales tactics may cost Hong Kong its name as shoppers' haven

Shirley Yuen says the government’s proposed legislative changes won’t serve consumers as intended.

Hong Kong has a well-deserved reputation as a shoppers’ paradise. That may be about to change, as a result of the proposed legislation currently before LegCo, which the Government is keen that LegCo adopts before the end of this legislative session.

The Hong Kong General Chamber of Commerce (“HKGCC”) supports in principle the objective of the proposed legislation (a series of amendments to the Trade Descriptions Ordinance), namely to step up efforts to stamp out unscrupulous or aggressive sales practices which hurt consumers. Our concern is that the law as drafted goes much further, and catches innocuous, normal, everyday competitive conduct which has no adverse impact on consumers. What is worse, such conduct would be classified as criminal, with possible sanctions including imprisonment potentially even in cases where the conduct may be unintentional or does not cause actual harm.

One of the new offences introduced in the law is “misleading omissions”. If a sales person omits to give a customer a piece of information which an “average consumer” would need to decide whether or not to buy a product, even if this is an innocuous and inadvertent mistake, it could amount to a criminal offence. It does not matter whether or not the customer decides to buy the product – it will still be an offence.

A submission made by the Hong Kong Retail Management Association (“HKRMA”) to the Bills Committee gives very clear, simple, everyday examples of conduct which would be criminal under these provisions. In response to one of these examples, the Government did not rule out that, in certain circumstances, a failure by a bar waiter to tell a customer about a particular wine on promotion by the glass could be criminal, even if it was a simple oversight. Clearly, there should be no question of an inadvertent mistake of this kind being a criminal offence. But that appears to be the result of the Bill as currently drafted.

Another new offence is “aggressive sales practices”. This is not limited to using physical force, harassment or coercion, which most people agree should be illegal. It also includes the concept of “undue influence”. Of course, the whole purpose of having sales staff is for them to encourage or influence people into buying - so when does such influence become “undue”? The Bill does not make this clear. HKGCC believes that this concept should be deleted, otherwise here is a real danger that it will deter normal, enthusiastic attempts by sales staff to sell products or services.

HKGCC believes that if these new criminal offences were to be introduced, a clear line should be drawn between conduct which is deliberate and dishonest and should be prohibited, and unintentional or harmless conduct, which should not. Nonetheless, our submissions to this effect have so far been rejected. The Government’s response has been the three-pronged one which it used initially on the Competition Bill, in response to concerns by businesses that it was unclear about which conduct was caught. To paraphrase this response:

We need to keep the law broad in case we miss any conduct that we’d like to catch;
Don’t worry: the enforcement authorities will give you more clarity later in guidelines; and
This is the way they do it in other countries (Australia and the UK).

Clearly none of these points are a satisfactory substitute for clarity in the law itself – especially since Hong Kong has a Basic Law and Bill of Rights which require as a matter of law that criminal offences are clearly defined.

The risks of the Bill as currently drafted are clear:

Retailers (and their sales staff) will compete less vigorously, and focus on well-known brands that customers know about, rather than seeking to bring interesting new products to the market, and risk inadvertently omitting relevant information.
A career in sales will be less attractive, if innocent mistakes or over-enthusiastic attempts to sell products can lead to criminal offences. This could lead to staff departures and hiring difficulties for the retail sector.
Hong Kong consumers, and Hong Kong’s reputation as a shopper’s paradise, will suffer. This would be a perverse result, as the Bill has the objective of protecting consumers’ interests.

With some further attention by the Government and LegCo, these consequences can be avoided, through amendments to the Bill which would target the new criminal offences at genuinely noxious conduct which harms consumers. HKGCC, HKRMA and others have provided suggestions to the Government to this effect. In the interests of Hong Kong, we would urge the Government to reconsider these views, especially when there is no desperate urgency to have the Bill passed without these amendments. Not doing so could harm Hong Kong’s consumers as well as its reputation.

Shirley Yuen is CEO of the Hong Kong General Chamber of Commerce.

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