Singapore - CCCS Cracks Down On Misleading Advertisements - Second Consumer Protection Enforcement Case.

Legal News & Analysis - Asia Pacific - Singapore - Regulatory & Compliance - Competition & Antitrust

29 August, 2019

 

Introduction

 

On 16 August 2019, the Competition and Consumer Commission of Singapore (CCCS) found that Charcoal Thai 1 restaurant breached the Consumer Protection (Fair Trading) Act (CPFTA) by publishing misleading representations with respect to discount periods applying to certain discounted meals on its menu.  Charcoal Thai 1 has since agreed to cease this conduct which amounted to an "unfair practice" under the CPFTA.  This is the second enforcement case that the CCCS has undertaken since taking on responsibility for enforcing consumer protection law in Singapore in April 2018. 1

 

Factual background 

 

The CCCS commenced investigating Charcoal Thai 1 in 2018, when it found that discounts included in promotional materials published on Charcoal Thai 1's website, social media page, in-store posters and menu did not identify an end date (i.e., they did not state how long the discounts would be available).  Those promotional materials also stated that the discounts for meals such as lunch sets and steamboat items were either available for a "limited period only" or would be "Ending Soon! 50% Discount", when in fact the discounts that had been offered in February 2016 had continued to be available for at least another 2 years.

 

Legislative background

 

The CPFTA prohibits unfair trade practices.  Pursuant to the CPFTA, it is an unfair practice to represent that goods or services are available at a discounted price for a stated period of time, if the supplier knows or ought to know that the goods or services will continue to be available for a substantially longer period.

 

On 1 April 2018, the CCCS took over the role of administrator and enforcer of the CPFTA from SPRING Singapore.  Under the CPFTA, the Consumer Association of Singapore (CASE) and the Singapore Tourism Board (STB) remain the first points of contact for local consumers and tourists respectively to handle complaints.  The CCCS, however, has the power to gather evidence against companies that it considers to be persistent or repeat wrong-doers, and to seek injunctive relief against these companies from the courts.

 

CCCS' view

 

The CCCS was of the view that:

 

  • The relevant representations may have misled consumers into believing that there was a price benefit arising from the promotional pricing, and a degree of scarcity in relation to such  promotional prices; and
  • It also provided Charcoal Thai 1 an unfair advantage over businesses which comply with the CPFTA.  Businesses which do not publish misleading discount advertisements assist consumers to make accurate price comparisons by offering genuine discounts over a stated period of time.

 

Voluntary remedies

 

Charcoal Thai 1 has since agreed to:

 

  • Cease the unfair practice and not engage in any other unfair practices under the CPFTA; and
  • In particular, it has undertaken not to make any representations with respect to discounts or promotions in its promotional materials or any other forms of publicity without specifying the end date for those discounts or promotions.

 

Given the above, the CCCS has closed its investigation in relation to Charcoal Thai 1, although it will continue to monitor Charcoal Thai 1's conduct to ensure it complies with the undertaking as well as whether it breaches other unfair practices.

 

Key messages for businesses

 

Businesses operating in Singapore should ensure that discounts or promotions offered are genuine and that promotional/marketing materials assist consumers to make accurate price comparisons.  

 

We expect the CCCS to continue to actively investigate alleged breaches of consumer protection law, particularly in industries where consumer complaints are common.  These industries include: the motoring industry, the beauty industry, e-commerce and food and beverage.

 

1. The first enforcement case was also an unfair practices case against the SG Vehicles group of companies (SG Vehicles) and its director, Ms Tan Whye Peck.  The unfair practices involved, inter alia, misrepresentations over the terms and conditions of motor vehicle sale agreements.  Consumers reported being required, amongst other things, to make additional payments due to changes in circumstances beyond their control.  Initially, the Consumers Association of Singapore (CASE) requested that SG Vehicles sign a Voluntary Compliance Agreement to cease engaging in unfair trade practices but SG Vehicles declined to do so.  The CCCS commenced an investigation into this matter.  SG Vehicles did not dispute the CCCS investigation of the complaints against SG Vehicles which revealed evidence of unfair trade practices. By the parties' mutual agreement, a court order was issued prohibiting SG Vehicles (including its directors) from, inter alia: (a) engaging in unfair practices; (b) doing anything if as a result, a consumer might reasonably be deceived or misled into believe that the purchase price is fixed; (c) making any false claims to a consumer as to any guaranteed delivery date of a motor vehicle; and (d) taking advantage of a consumer.

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For further information, please contact:

 

Alyssa Phillips, Partner, Ashurst
alyssa.phillips@ashurst.com