Beauty bosses cry foul over cool-off plan

Top News | Sophie Hui 6 May 2019

Nearly half of beauty centers say they could close down if a mandatory cooling-off period comes into effect.

A survey by a beauty industry concern group that involved 1,068 salons between March and April found that 47.4 percent would consider shutting their doors.

Based on research by the Vocational Training Council in 2016, that figure amounts to more than 5,800 centers.

About 91 percent said the government-proposed cooling-off period would affect business.

The concern group believes those that would be in danger of shuttering could rise to 70 percent as 90 percent of salons are small-scale enterprises that have less than 10 employees.

It added that, following the proposal, banks have extended the payback period from 120 to 180 days instead of 60 to 90 days in the past.

This means centers need to wait a longer time to get their money back, which has affected their cash flow. Additionally, customers would enjoy fewer discounts as they need to retain more capital.

To handle customer refunds, salons said need to hire more people, leading to additional labor costs.

The concern group added that under the proposal, customers can get their money back by simply filling in a form.

It said the industry is worried that the mechanism would be abused and people would make irrational purchases.

It said after consumers get their refunds, they would not purchase the services from the same center in the future. "They [consumers] don't need to give a reason to ask for their money back, and without any kind of contact with the merchant, that means the merchants wouldn't have any chance to improve their services, and they wouldn't have any idea what has been done wrong," said Joseph Ho Shiu-chung, one of the representatives of the concern group.

"This is completely unfair."

The concern group said 20 percent of salons already offer a cooling-off period to customers, and 76.6 percent believe a voluntary cooling-off period would be more effective than a mandatory scheme.

The concern group also interviewed 1,109 consumers and said nearly 64 percent are against a mandatory cooling-off period. More than 73 percent believe it would be more effective to combat the high-pressure sales practices through the Trade Descriptions Ordinance rather than adopting a cooling-off period.

In response, the Consumer Council said having a mandatory cooling-off period increases the deterrent effect to rogue traders and enhances protection of consumer rights.

It can also rebuild the industry's image and consumers' confidence.

The watchdog added that a voluntary cooling-off period has proved ineffective over the years.

Regarding mechanism abuse risks, the council believes the government has fully considered them and struck a balance.

The three-month consultation for the cooling-off period ended on April 16. The consultation comes after the Customs and Excise Department and the Consumer Council received a large number of complaints related to beauty and fitness packages in recent years.

Under the proposal, refunds would be offered if people pay HK$3,000 or more in advance and decide to cancel their package during the cooling-off period.

The government has suggested two time scales - a three-working-day cooling-off period in which consumers get their money back after seven working days or a seven-calendar-day cooling-off period and 14 days for refunds to be issued.

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