Singapore: Consumer watchdog successfully obtains Court order against 2 nail salon outlets for unfair trade practices

In Competition and Consumer Commission of Singapore v Nail Palace (BPP) Pte. Ltd. and another matter [2002] SGDC 171, 2 nail salon outlets were ordered to stop unfair trade practices upon application by the Competition and Consumer Commission of Singapore.

In brief

On 8 August 2022, the Competition and Consumer Commission of Singapore (CCCS) successfully obtained a Court order against 2 nail salon outlets for engaging in unfair trade practices under the Consumer Protection (Fair Trading) Act 2003 (CPFTA). The nail salon outlets, which are part of the Nail Palace chain, were found to have made misleading representations to consumers concerning the need for fungal treatment packages.


Contents

In more detail

Background

Employees from 2 Nail Palace outlets (in Bukit Panjang Plaza and East Point Mall) were found to have misled customers into signing up for fungal treatment packages.

On August 2020, an employee at the Bukit Panjang Plaza outlet made a misleading representation to a customer concerning the need for fungal treatment packages. In particular, the employee informed the customer that she had fungus on her big toes and had to undergo fungal treatment, without which the infection would spread. Relying on the employee's representations, the customer signed up for a 6-session Dermal Fungus Treatment package with Nail Palace.

On a separate occasion in December 2019, a customer at the East Point Mall outlet was told by an employee that she had fungus on her toenails and that the infection could spread to her husband if she did not undergo treatment. The customer then paid for a 12-session fungal treatment package.

Additionally, the employee misled the customer into paying for certain lipsticks and lip balms by omitting to mention that they were included in the fungal treatment package that the customer purchased.

The Court’s Decision

In general, the Courts have a discretion whether or not to grant relief against a supplier engaging in unfair trade practices, such as injunctions and other accompanying orders.

In this instance, the Court held that it was appropriate to exercise its discretion to grant the injunctions sought for against the Nail Palace outlets. This is because the Court found that the nature of the contraventions in the cases was moderately severe for the following reasons:

  • The employees in question could not have held a genuine belief that the customers had fungal infection on their toenails because they would have known, as per Nail Palace's standard operating procedures (SOP), that they could not diagnose fungal infection based solely on visual inspection. Under the SOP, they were required to use a "Fungusless test" to make such a determination and before recommending any fungal treatment, but failed to do so.
  • The customers did not experience any symptoms associated with fungal infection. In fact, one of the customers consulted a doctor a few weeks after purchasing the treatment package, who stated that there were no obvious fungal nail or skin changes around her feet and no symptoms of itchiness commonly associated with fungal infection.
  • The employee at the East Point Mall outlet had deliberately misled the customer by omitting to mention that lipsticks and lip balms were included in the price of the fungal treatment, and proceeded to charge her for the items.
  • There was also a real risk that the outlets might commit similar contraventions in the future due to a lack of adequate policies and practices in place to prevent such recurrences (including training of employees and measures taken following complaints by the customers).

Accordingly, the Court granted the following orders:

  • a declaration that the 2 Nail Palace outlets had engaged in unfair practices under the CPFTA;
  • a restraining order against the 2 Nail Palace outlets from engaging in such unfair practices in the future;
  • an order for Nail Palace to publish details of the declaration and restraining order granted against them in full-page notices in several national newspapers, such as The Straits Times;
  • an order for the outlets to notify customers in writing and obtain written acknowledgements of such notices in relation to the above declaration and restraining orders before entering into any contracts with consumers for the next 2 years; and
  • the outlets to notify the CCCS in writing of the occurrence of a stipulated list of events (including change in premises, change in business name, etc).

Implications

This case highlights that the CCCS is empowered to make applications to the Courts for declarations, injunctions and accompanying orders against errant companies, which may lead to negative publicity and  reputational harm, as this case has illustrated.

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