Most of the time when you buy something, you get the goods the same time you hand over your money. There are however exceptions - spa packages, tour packages, gym packages etc. What is in place to stop owners of the businesses from running with your money or using your money to offset the operating costs then going bankrupt? Not much really.
Many years ago, we had property developers that went bust leaving hundreds of homebuyers in limbo. These developers had other businesses such as contruction, trading etc and after buyers payup, something would go wrong, usually with one of the other businesses, causing the developer to go bust. This was fixed by the requirement for developers to hold homebuyers money in an escrow account that cannot be touched until the homes are completed and delivered to buyers. The effectiveness of this measure was seen in the collapse of Amcol Holdings. If you drive along ECP westwards towards the Singapore Flyer, you can see a large condo development called Costa Rhu[Picture here] developed by Amcol Holdings. While it was developing Costa Rhu, the company went bust due to fraud but buyers of Costa Rhu were unaffected. Customers of the now notorious spa Wax In the City(WITC), however, are not so lucky:
WITC has about 2000-3000 customers who paid for spa packages that cost between $500-$2000. That is a lot of money. What the owner of WITC, Alex Zhou has done with the money is not so clear. We will probably get to see some of the (ugly?) details once investigators start doing their work. Customers may or may not get their money back. But the question on my mind is whether the govt will again take the hands off approach and simply say "buyer beware" until the next 'outbreak'.
Some people get the wrong impression that having less regulation always lead to more competition. That is not the case and we can use spas to illustrate this. Because spas go bust and leave customers holding the bag, spa lovers will now only go for well established spas although the price may be more expensive. This makes it much harder for honest smaller spa operators to start and grow their businesses. Over time the market will be dominated by a few big names. Before the govt put in place the new regulation for property purchase, people hesitate to go to smaller law firms even though they charge a lower amount for conveyance.
Singapore is not unique in having problems with lawyers, spas and tour agencies. What is unique is we have a very expensive govt that is slow in implementing common sense regulation that will improve protection for consumers and create an environment that will foster greater competition that will be conducive for small business upstarts.
Problem with spas? Many countries have problems with unscrupulous spa operators and were quick put in place very simple measures - requirement to put up performance bonds before they are allowed to offer packages, requirement to show financial responsibility, escrow accounts etc. When did they do this? 5 years ago? 10 years ago? .....In Britain, they were put in place in 1978 i.e. 32 years ago[Link]...in the US, 30 years ago [Link][Link]. "Buyer beware" is just an excuse to avoid doing work and here we have an expensive govt that is not doing work, that is why the customers are hurt:
"Meanwhile, the Consumers Association of Singapore said customers should be careful when they buy packages involving instalments. Seah Seng Choon, executive director, Consumers Association Of Singapore, said: This pre—payment packages arrangement is totally unregulated and customers need to understand that. They need to be mindful of this and take steps to protect their interests for the time being. There are several disadvantages for consumers to sign up for packages." - Yahoo News [Link]
CASE once again resorts to the "blame the victims" approach.... "customers should be careful"..."customers need to understand". Why doesn't CASE press the govt to have proper regulations so that such sad stories don't repeat! Have they learnt nothing from all these cases?! It is really quite amazing that someone can set up a business in Singapore, collect hundreds of thousands from customers then close down without delivering the services/goods ...and when you go to the authorities, they tell you there is nothing they can do about it...