SINGAPORE: In a first, two businesses under nail salon chain Nail Palace have been fined S$15,000 (US$11,500) each, while their managing director was sentenced to four months’ jail, after being found guilty of contempt of court, the Competition and Consumer Commission of Singapore (CCCS) said on Tuesday (Sep 10).
Nail Palace (BPP), Nail Palace (SM) and managing director Kaiden Cheng were taken to task for failing to comply with court orders in relation to unfair trade practices over the sale of anti-fungal treatment packages.
CCCS said this was the first time it had instituted contempt proceedings against an errant business and its manager for breaching such court orders.
Singapore’s consumer watchdog added that this was also the first time it had obtained a “substantial” fine and jail sentence against the parties that had infringed the Consumer Protection (Fair Trading) Act (CPFTA).
“The court’s decision to fine the NP entities and impose a custodial sentence on Kaiden Cheng signals its disapproval of errant suppliers that flagrantly disregard court orders,” said CCCS.
UNFAIR PRACTICES
Nail Palace (BPP) and Nail Palace (SM) operate the chain’s outlets at Bukit Panjang Plaza and Eastpoint Mall in Simei respectively. According to its website, Nail Palace has 25 outlets in Singapore, offering services such as manicures, pedicures and waxing.
On Dec 17, 2021, CCCS took legal action in the State Courts, seeking declarations and injunctions against both businesses for having engaged in one or more unfair practices under the Act, following complaints by various consumers.
The Act contains what’s known as Singapore’s “lemon law”, which provides remedies against defective goods (lemons). These are goods that fail to meet standards of quality and performance, even after repeated repair.
Investigations had found that both Nail Palace businesses made false or misleading representations to a consumer over the need for an anti-fungal treatment package.
The Simei outlet had also misled a consumer into thinking that certain lipsticks and lip balms were free as part of an anti-fungal treatment package. The consumer was instead billed for the products, said CCCS.
In August and September 2022, a district court ordered both businesses to declare they had engaged in an unfair practice by misleading a consumer over the need for anti-fungal treatment or an anti-fungal treatment package.
The Simei outlet had to also declare it engaged in a separate unfair practice by failing to inform a consumer that certain lipsticks and lip balms were included in the price of an anti-fungal treatment package.
Injunctions were obtained to stop both businesses from engaging in such unfair practices, while they also had to publish the details in four major Singapore newspapers.
They were also required to inform customers that they had engaged in unfair practices and had to obtain written acknowledgement before entering into a contract with them. This was to be in place for a period of two years.
Their appeals were dismissed by the High Court in July 2023, with both businesses then told they had to “comply with the orders with immediate effect”.
SEVERAL BREACHES
CCCS monitored both businesses following their failed appeals and found that they, along with Cheng, did not comply with the court orders.
There were three breaches:
- The three parties did not meet the Aug 18, 2023 deadline to publish details of the declarations and injunctions in the four major Singapore newspapers
- When they published a notice nearly two weeks after the due date, the words were “extremely small” and “practically unreadable”, thus failing to fulfill the purpose and intent of the notice, said CCCS. It added that “such notices did not secure adequate publicity of the details of the declarations and injunctions”. The consumer watchdog also noted the notices in all four major Singapore newspapers were made in English, and not in the respective languages in which they were meant to be published
- All three parties also failed to notify and obtain the written acknowledgements of consumers of the declarations and injunctions made against the businesses before entering into contracts with them
CCCS then initiated contempt of court proceedings against the two businesses and Cheng in November 2023 for breaching the court orders, and sought fines and imprisonment.
On Monday, a district court found that there had been “continuing, deliberate, egregious and persistent conduct”, as well as a “lack of urgency and a cavalier approach” by the parties.
The court also deemed that a jail term for Cheng was “appropriate”, as the breaches were “irremediable and had prejudiced the public at large”.
CCCS Chief Executive Alvin Koh said the watchdog welcomed the decision of the district court and is committed to enforcing the law for the benefit of consumers in Singapore.
“Unfair trade practices curtail the ability of consumers to make informed choices and CCCS will continue to take errant businesses to task, including seeking fines and imprisonment sentences, should they fail to comply with court orders issued under the CPFTA,” he added.
The Consumers Association of Singapore (CASE) also said it welcomed the district court’s ruling.
In a Facebook post, CASE president Melvin Yong said that CASE had referred Nail Palace to the CCCS for investigation after receiving multiple complaints relating to “pressure sales tactics and misleading sales”.
He added that the company had “refused to sign a Voluntary Compliance Agreement to cease its unfair practices”.
“This is a landmark case and I am glad that it sends a strong message that those who perpetuate unfair business practices must face the consequences.”
