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Amendments to the Trade Descriptions Ordinance in Hong Kong
1 September 2013

To promote fair trade, enhance protection for individual consumers and to prevent unfair business practices in Hong Kong, the Trade Descriptions (Unfair Trade Practices) (Amendment) Ordinance 2012 was passed on 17 July 2012 to amend the Trade Descriptions Ordinance (Cap 362) (“TDO”).

The purpose of the amendments is to :-

(a) prohibit false trade descriptions, false, misleading or incomplete information, false marks and misstatements in respect of goods provided in the course of trade or suppliers of such goods;

(b) confer power to require information or instruction relating to goods to be marked on or to accompany the goods or to be included in advertisements;

(c) restate the law relating to forgery of trademarks;

(d) prohibit new unfair trade practices;

(e) prohibit false trade descriptions in respect of services supplied by traders; and

(f) confer power to require any services to be accompanied by information or instruction relating to the services or an advertisement of any services to contain or refer to information relating to the services.

The amendments to the TDO came into operation on 19 July 2013 and the major amendments of the TDO are summarized as follows :-

Expansion of definition of “trade description”

The TDO expands the definition of “trade description” in relation to goods to include indications of any of the following :-

(a) availability;

(b) compliance with a standard specified or recognized by any person;

(c) price, how price is calculated or the existence of any price advantage or discount;

(d) liability to pay duty on them under the laws of Hong Kong, generally or in specified circumstances;

(e) person by whom they have been acquired, or who has agreed to acquire them; and

(f) their being of the same kind as goods supplied to a person.

Expansion of definition of “product”

The TDO expands the definition of “product” to cover service which is defined to include any right, benefit, privilege or facility that is, or is to be, provided, granted, conferred or offered under a contractual right other than one arising under a contract of employment (except goods or services sold or supplied by a person regulated, licensed, registered, recognized or authorized under the Insurance Companies Ordinance, the Banking Ordinance, the Mandatory Provident Fund Schemes Ordinance or the Securities and Futures Ordinance).

New Offences of Unfair Trade Practices

(1) Misleading omissions

A trader commits an offence of misleading omissions if it omits or hides material information, or provides material information in a manner that is unclear, unintelligible, ambiguous or untimely, or fails to identify its commercial intent, and as a result it causes or is likely to cause an average consumer to make a transactional decision that the consumer would not have made otherwise.

(2) Aggressive commercial practices

A trader commits an offence of aggressive commercial practices if the commercial practice (a) significantly impairs or is likely to impair the consumer’s freedom of choice or conduct in relation to the product concerned through the use of harassment, coercion or undue influence and (b) causes or is likely to cause the consumer to make a transactional decision that the consumer would not have made otherwise.

(3) Bait advertising

A trader commits an offence of bait trading if a trader advertises products for supply at a specified price, but there are no reasonable grounds for believing that the trader will be able to offer for supply those products at that price, or the trader fails to offer those products for supply at that price, for a period that is, and in quantities that are, reasonable, having regard to (a) the nature of the market in which the trader carries on business; and (b) the nature of the advertisement.

(4) Bait and switch

A trader commits an offence of bait and switch if a trader makes an invitation to purchase a product at a specified price with the intention of promoting a different product and the trader (a) refuses to show or demonstrate the product to consumers, or (b) refuses to take orders for the product or deliver it within a reasonable time, or (c) shows or demonstrates a defective sample of the product.

(5) Wrongly accepting payment

A trader commits an offence of wrongly accepting payment if the trader accepts payment or other consideration for the product and at the time of that acceptance, (a) the trader intends not to supply the product, or (b) the trader intends to supply a product that is materially different from the product in respect of which the payment or other consideration is accepted, or (c) there are no reasonable grounds for believing that the trader will be able to supply the product (i) within the period specified by the trader at or before the time at which the payment or other consideration is accepted, or (ii) if no period is specified at or before that time, within a reasonable period.

Extra-territoriality

A trader may commit an offence under the amendments of TDO with respect to a commercial practice even if the practice is directed to consumers who are outside Hong Kong if, at the time of engaging in the practice, the trader is in Hong Kong or Hong Kong is the trader’s usual place of business.

Defences

The defences available for the offences under the TDO are (1) the commission of the offence was due to a mistake or to reliance on information supplied to the trader or to the act or default of another person, an accident or some other cause beyond his control, and (2) that the trader took all reasonable precautions and exercised all due diligence to avoid the commission of such an offence by himself or any person under his control.

The additional defence for the offences of bait advertising and wrongly accepting payment is the trader can supply or procure a third party to supply the same products or equivalent products.

Penalties

Any person who commits an offence under the TDO shall be liable to the maximum penalty of fine of HK$500,000 and imprisonment of 5 years upon conviction.

Civil Liabilities

The court may order a person convicted of an offence under the TDO to pay an amount of compensation that it thinks reasonable to any person who has suffered financial loss resulting from that offence.

A consumer may also commence a civil action to recover the amount of loss or damage suffered because of an offence under the TDO within 6 years after the day on which the cause of action that relates to the offence accrue.

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