Letters | Hong Kong must come to grips with risks of prepaid service contracts

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The abrupt closure of Alliance Medical Group has once again sparked concerns over consumer protection for prepaid services. While the most high-profile case last year was the shutdown of fitness chain Physical, similar incidents have occurred over the years.

In 1998, the sudden liquidation of bakery chain Maria’s left customers with worthless prepaid cake coupons, drawing widespread media attention. That same year, video rental chain KPS Video Express forced customers to redeem prepaid coupons within a limited time frame, leading to a frenzy where patrons had to rent four to five films in a single day.

The tutoring sector has also seen several cases of prepaid service providers shutting down, including Little Frog Learning Centre last year and Brilliant Education in 2023. Beauty centres, too, have long been notorious for collecting prepaid fees but failing to deliver promised services. These issues tend to surface during economic downturns, highlighting the risks consumers face when they prepay for services.

In 2019, the government conducted a three-month public consultation on legislating cooling-off periods for beauty and fitness service contracts. However, the initiative was shelved due to the city’s socio-economic upheaval later that year.