Anita Lam is a consultant, head of employment, Hong Kong, at Clifford Chance. She practises across all areas of employment law, with a particular focus on contentious employment, discrimination and data privacy disputes.
Unscrupulous sales practices have continued to make news headlines in Hong Kong in recent months. Given the number of arrests made recently by the Customs and Excise Department, salespersons and management staff should pause to examine their potential legal exposure.
In Hong Kong, engaging in “aggressive commercial practice” is a crime under the Trade Description Ordinance. A commercial practice is aggressive if it would significantly impair the average consumer’s freedom of choice to buy a product or service through “harassment, coercion or undue influence”, in cases where the customer would not have otherwise bought it.
The maximum criminal penalty for engaging in aggressive commercial practice is a HK$500,000 fine and imprisonment of five years. Directors and managers can also be subject to criminal penalty if the crime is committed with their consent or is attributable to their neglect.
In July this year, beauticians from various beauty parlours were arrested for using aggressive sales tactics to pressure customers to buy treatment packages costing more than HK$100,000. Through the employees’ use of threatening behaviour, the customers’ credit cards were used to buy the packages without obtaining their consent.
Similarly, in August this year, two beauticians were arrested and charged for engaging in aggressive commercial practices when selling body treatment packages. They intimidated a customer and would not let her leave the beauty parlour unless she made the purchase. Although the two beauticians were not convicted due to technical reasons, the court made it clear that it was wrong for them to have made the threats.
In July last year, the Customs and Excise department arrested four people at a fitness centre for engaging in suspected aggressive commercial practice. According to the report, one salesperson, two directors and a manager were arrested. The complainant was approached by a salesperson in the centre who persistently persuaded her to buy a 10-year membership for HK$38,000. The complainant declined the offer as she already had a 10-year membership.
However, the salesperson asked the complainant to produce her ID and credit card such that she could check if there were any discounts. Without authorisation, the salesperson charged the credit card to purchase the membership. The complainant was forced to accept the purchase after being told that it was impossible to get a refund.
In April 2015, three beauticians of a beauty parlour were convicted of engaging in aggressive commercial practices in selling body care therapy services to a customer. This was the first conviction under the Trade Description Ordinance. The Customs and Excise Department conducted the investigation after receiving a complaint in November 2013. It was found that the three beauticians told the customer that she had lumps in her chest which could become cancerous, and then persuaded her to buy a body treatment package worth HK$140,000.
Although the customer was reluctant to buy such an expensive package, the three beauticians persisted for over an hour and talked her into buying it. The customer finally made the purchase and paid a deposit of HK$70,000.
The court ultimately found the beauticians guilty of engaging in aggressive commercial practice. One of the beauticians was sentenced to 200 hours of community service and the other two were sentenced to three months’ imprisonment. They also had to repay the sum of HK$70,000 to the customer.
Selling practices may cross a legal line, depending on their timing, location, and nature or persistence. To avoid this, don’t:
●Use threatening or abusive language or behaviour when selling
●Exploit specific misfortune or circumstance to influence the consumer’s purchasing decision
●Impose onerous or disproportionate barriers to terminating the service – or stop customers from switching to another product or trader.
Make sure you do:
●Check with customers that they agree to the price of the products before taking their credit cards
●Provide training to staff and ensure they understand the legal consequences of engaging in aggressive commercial practice or condoning such practice
●Review employees’ guidelines and sales manuals to ensure they illustrate and prohibit aggressive selling practices
●Put in place a system to check that sales practices are legally compliant.
This article appeared in the Classified Post print edition as Avoid aggressive tactics to limit legal exposure.