Thursday 16 February 2012

'Lemon law' to protect consumers

Those stuck with faulty goods can get them repaired or replaced
By Christopher Tan & Jessica Lim, The Straits Times, 15 Feb 2012

FROM September, consumers who find themselves saddled with defective goods need not be stuck with lemons.

Proposed changes to the Consumer Protection (Fair Trading) Act and Hire Purchase Act were introduced in Parliament yesterday, paving the way for the so-called 'lemon law'.

They set clearer guidelines for consumers seeking redress for purchases that fall short in quality and performance, even after being repaired repeatedly.

The changes will also ensure that businesses get a chance to repair or replace the goods.

If a product is found to be defective within six months of delivery, the flaw will be assumed to be inherent, unless the retailer can prove otherwise.

A two-stage framework for consumers seeking recourse will then be put in place.

First, the consumer can get the retailer to repair or replace the defective item.

The second stage kicks in if the retailer fails to repair or replace the product 'within a reasonable time or without significant inconvenience' to the consumer.

In this situation, the buyer can keep the product, but demand a discount, or return the product for a full refund.

Consumers will be able to take this course of action even after six months from delivery of the item, as long as they can prove the defect was present from the time the product was new.

Retailers may also choose the second step if it is not feasible to repair or replace a defective product, or if the cost of doing so is too high.

If a case cannot be settled, it can go to court, starting with the Small Claims Tribunal, and all the way to the High Court.

The burden of proof still lies with the retailer if a defect was spotted within six months of delivery - that is, he must show that the product was not inherently defective when it was sold.

The proposed changes cover durable goods - and that means everything from a pair of trousers to a car - and include those bought on hire purchase, new or second-hand. But rental goods, services and buildings are excluded.

Additional provisions are made for cars. In the first move of its kind here, the Road Traffic Act will be amended to allow the Additional Registration Fee and certificate of entitlement on a defective car to be transferred to a replacement vehicle.

This will be allowed within the car's first year, or the first 20,000km, whichever comes first, and only after three attempts to repair it have failed.

But if the flaw is safety-related, the consumer can seek redress after one failed attempt to repair it.

Allowing tax transfers lightens the business cost of motor firms and might encourage them to be more open to replacing a defective vehicle that cannot be repaired.

At a press briefing yesterday, the Ministry of Trade and Industry (MTI) said that given the diverse range of goods, it is not possible to specify the number of times the supplier is required to repair a defective item.

The proposed changes to the law will therefore give the courts room to judge what constitutes 'a reasonable timeframe' for repairs and 'significant inconvenience' to the buyer.

There is room to apply common sense, so there is no need for 'prescriptive rules' that might make the lemon law too complicated for businesses and consumers, it said.

The Consumers Association of Singapore (CASE) has been lobbying for a lemon law since 2005, and the proposals are modelled on similar consumer protection laws in Europe.

Mr Seah Seng Choon, executive director of CASE, said he has come across cases in which consumers were told to send defective items for repeated repairs.

'And when the item could not be repaired, the retailer just refused to replace it. This left the consumer no choice but to either give up or take the retailer to court,' he said.

He hoped the proposed changes would put an end to such cases, and make it easier for consumers to get replacements and refunds.

He also hoped that retailers would be nudged to ensure quality in the products they sell.

'Shoddy goods which are not up to standard should not be in the market. Retailers who sell high-standard goods will certainly welcome this,' he said.

The MTI said it took time to introduce the lemon law because it had to study existing laws here as well as practices in other countries.

A public consultation exercise was carried out between December 2010 and January last year to seek views from consumers and traders.

The changes to the law are expected to be passed and take effect from September.

Some retailers worry buyers will abuse law
Consumers welcome move, but some wonder about its effectiveness
By Jessica Lim, The Straits Times, 15 Feb 2012

WHILE retailers interviewed yesterday generally welcomed the proposed lemon law, some were worried that they might have problems getting their suppliers to replace defective items.

Others wondered if there would be a rise in frivolous demands by consumers.

Mr Jimmy Fong, chief executive of IT chain EpiCentre, which has hundreds of suppliers, said: 'Us retailers are just middle men. We did not make the lemon after all.

'If the manufacturer does not let us return the product, then it will be tough on us. We would be between a rock and a hard place.'

The company will be meeting manufacturers to discuss the matter, he said, adding: 'It is never fair for anyone to buy a lemon. But how can we make sure the law is not abused?'

A spokesman for Nuance Watson, which sells mostly beauty products and cosmetics at 22 stores here, said it supports the proposed law, but is concerned about consumers bringing back used products and saying they are defective.

'We sell mostly beauty products, so customers may have used the product for some time,' she said,

She added that there are also grey areas, such as what defines a defect.

'For things like pumps on a shampoo product not working, it is much clearer, and we will definitely replace the product. It is what good customer service is about,' she said.

'But what if a customer uses a product and has an allergic reaction to it, for instance?'

Mr Terry O'Connor, managing director of retailer Courts, felt the proposed law will work to the store's favour.

The furniture chain currently has a seven-day no questions asked exchange and refund policy, and the majority of its suppliers carry strong warranties.

'Tightening the law will play to our strengths and filter out the poorer practices of others.

'We import our products and endorse our sources of supply by selling their goods. So, we are responsible to repair and exchange defective products,' he said, adding that the company will help to make sure the new law is upheld.

Consumers were naturally happy to hear that the law might soon be ready.

Bank manager Ling Lee, 40, said she wished the amendments had come sooner. In October last year, she bought a coffee machine for $398, only to have it stop operating when she tried to make her second cup of coffee.

She claimed the manufacturer refused to refund or exchange the machine for a new one despite several attempts at repairing it. She received a full refund only in January, after she approached the Consumers Association of Singapore (CASE).

'I asked the company for a refund many times, but it refused. It told me that it could only do repairs. It was so ridiculous. How could I repair it after each cup of coffee?' she said.

'Currently, these companies can just get away with selling defective products. I think, in my case, they just hoped that I would give up after some time.'

Teacher Chan Choon Seng, 42, while glad about the law, wondered how useful it will be: 'In the end, if the retailer simply refuses to give me a refund or replace the product, what can I do?' he said. 'I will still have to haul it to court. It is a start, but only time will tell how useful it really is.'

CASE, which proposed the amendment, received 1,793 complaints on defective products last year, up from 1,753 in 2010 and 1,652 in 2009.

More than 60 per cent of the defects last year involved mobile phones, furniture and electronic products.


What are the key changes to the Consumer Protection (Fair Trading) Act and Hire Purchase Act?

Currently, when you land a lemon, the retailer is not obligated to repair, refund or replace the defective product. It can argue its way out and push the blame to other parties.

The amendments will make sales transactions more transparent and give consumers more avenues of recourse.

In particular, if a product is found to have a defect within six months of it being bought, the defect is presumed to have been there at the point of sale, and unless the retailer can prove otherwise, the consumer is entitled to the remedy.

What recourse will consumers have?

They can ask the seller to repair it, or get a refund or replacement. Currently, retailers can refuse to give a refund or replacement. Most prefer to send the product for repeated repairs.

Can consumers demand a refund or exchange without getting the product repaired first?

The retailer has the right to insist on repairing the product first. Retailers, however, may opt to replace the product or give a refund if repairing it is too expensive.

When can a consumer ask for a defective product to be replaced?

After at least two attempts by the seller to repair it. But for cars, if the flaw is safety-related, the consumer can seek redress after just one failed attempt at repair.

Under what conditions would consumers not be entitled to a remedy?

If they had damaged the item, misused it and caused the defect, or damaged it while trying to repair it themselves or through a third party. Consumers are also not entitled to any remedy if they knew about the fault before buying the product, or simply regretted buying the item.

Are retailers allowed to replace a consumer's defective product with a used one?

The amendments are silent on that. It is up to both parties to decide on an appropriate replacement.

If a consumer reported the defect within six months of buying the product but a remedy was not reached within that time, has he lost his chance to ask for redress?

No. Consumers still retain the right to remedy - repair, replacement and refund - as long as the consumer reported the defect within six months from the point of payment for the product.

If a product has a warranty, can a consumer get remedy from both retailer and manufacturer?

No. He can seek redress from only either the retailer or the manufacturer.

If a consumer had bought a TV set with a two-year warranty and it is defective, should he get redress using the warranty or via the lemon law?

If the defect was spotted after six months, it would be best for the consumer to seek redress under the warranty as the lemon law would not apply.

If the defect is spotted within six months, consumers have the option to seek redress using either their warranty or the lemon law. However, it may be best to seek redress under the lemon law, as warranties typically offer only repairs, but not replacements or refunds.

What happens if the retailer is out of stock of the product in question?

Consumers can ask for a refund or to replace it with another product with similar value or quality.

If an agreement cannot be reached with the retailer, what can the consumer do?

He can take the case to the Small Claims Tribunal for claims of $10,000 or less, and to the Magistrate Court for larger amounts. The law will be upheld in court.

Can a retailer be exempt from the law if he displays a notice that says 'we do not give refunds under any circumstances'?


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