Saturday, 29 August 2015

BreadTalkCock - Consumer Rights, and All That Jazz

This is not legal advice, nor is it a political post.  This post is meant to advocate for consumer interests, so any comments of a political nature will be deleted without any discussion or apology.

There has been a lot of talk recently about the BreadTalk soybean milk debacle.  Its CEO, George Quek, recently attempted a mea culpa by donating some money to the Community Chest and giving away a few weekends worth of free buns.  As far as responses go, I think it is wholly inadequate, and highlights a glaring weakness in our consumer rights protection.


Whoops...

If you have been living underneath a rock for the last few months, here's what happened in a nutshell.  BreadTalk had been repackaging soy milk from Yeos' cartons into bottles with the words "freshly prepared" on them, sold them to the unsuspecting public at $1.80 per 350mL bottle.  You could buy the 1L tetra-pak for $1.50 at FairPrice.  Trade discounts on groceries tend to range up to 30%, so assuming the Yeo's soy milk cost BreadTalk around $1.10 per carton, BreadTalk basically made a profit of $1.24 per bottle, or a margin of 368%.  Nice work if you can get it.

Of course, BreadTalk would have continued along blissfully misleading its customers, except in classic Singaporean fashion, a diligent "citizen-journalist" / professional kaypoh caught one of BreadTalk's servers openly filling the "freshly-prepared"-labelled bottles with the not-very-freshly-prepared Yeo's soya bean milk.

Things may have died down there, but BreadTalk's founder and chairman George Quek came out recently and offered the following as compensation:

 - $50,000 donated to the Community Chest
 - giving away 50,000 pork floss buns free of charge over three weekends from 28 August; and
 - signing a "Voluntary Compliance Agreement" with CASE (Consumers' Association of Singapore).

I do not work in the area of consumer rights, and my knowledge of remedies available to the consumer is limited to what I could find on the Interwebs.  What disappointed (and angered) me were the statements from CASE and so-called "experts" praising BreadTalk for its attempted apology and compensation offer, and their implications for consumers.


What the Stakeholders Said

“CASE is committed towards protecting consumers’ interest and promoting an environment of fair and ethical trade practices. We are glad that BreadTalk has been co-operative and has taken immediate action to prevent such future incidents.” - Mr. Lim Biow Chuan, President of CASE. 

"(BreadTalk) flouted the Consumer Protection (Fair Trading) Act, but CASE's hands are tied: It is powerless to do anything now that BreadTalk has stopped the unfair practice.  This is due to the way the consumer watchdog operates. To stop a business from engaging in an unfair practice, it typically issues a Voluntary Compliance Agreement (VCA) on the firm. This would require it to commit to stop the act.  If it persists, CASE will then take up an injunction against them.  The company would then be slapped with a court judgment to order them to stop the unfair practice. Ignoring the order would mean acting in contempt of court".  - Jessica Lim, The Straits Times, 20 August 2015

"It's a goodwill gesture and people are still talking about the issue...It's better than letting the incident blow over. It shows sincerity." - Sarah Lim, Senior Retail Lecturer at Temasek Polytechnic

The Answer to the Question

I asked a question in the title.  It seems in the current context, the answer is a clear and resounding "bugger all".

According to the Government broadsheet, CASE cannot do anything now that BreadTalk has allegedly ceased its deceptive conduct.  CASE can, through a rather roundabout mechanism, stop a company from engaging in deceptive conduct.  Read this article about how CASE doggedly pursued a furniture manufacturer to bring him to justice.  A furniture seller had 44 consumer complaints made against him.  The process seems to be:

(a)  CASE will try to contact the offender to ask it to stop the deceptive conduct.
(b)  If the offender does not respond, CASE will request the offender to enter into a "voluntary compliance agreement" (well if he's ignoring CASE, what chance he's even going to discuss entering into a VCE?)
(c)  If the offender does not respond to this, CASE will take the "rare step" (the words of CASE's Mr Lim) of applying to the Court to declare the offender guilty of unfair practices, and seek an injunction to stop the offender from continuing such practices.
(d)  If the Court grants the injunction and the offender breaches the terms of the injunction, then the offender may be charged with contempt of court, making him liable to a jail term or fines.

In short, the offender has at least three chances to continue its conduct after it has come to the attention of the authorities, and  CASE does not have any deterrent powers, such as the power to issue fines and suspensions of trading licenses, even after the Court has found the offender guilty of unfair practices.  Does this sound like a proper consumer protection regime to you?

This is a serious problem, and there are ethical and health issues at stake.  To give you another example, I could abuse chickens in the most appalling manner, you know, lock them up in overcrowded cages, deprive them of  sunlight, pump them full of antibiotics (making their bodies grow so fast that their legs break under their weight), slaughter them in an industrial death machine, label them as organic free-range chickens, sell them for $20 a piece, and I am at no risk whatsoever of a fine or other penalty.  If you are reading my blog, I presume you care something about what you put in your mouth.  Does this sound like an acceptable situation to you?

And why on earth are people like Sarah Lim giving BreadTalk credit for its "goodwill gesture"?  The answer is simple: in our current consumer protection regime, no further action can be taken against the offender.  If the offender issues a statement apologising and asking for a cuddle, we are meant to say "awwww, thanks, all forgiven".  If the offender then offers to donate a sum of money to a worthy cause, we actually give them a cuddle and praise their corporate social-mindedness.  This, of course, ignores the reality that THEY GOT CAUGHT WITH THEIR PANTS DOWN AND THEIR TODGERS STICKING OUT, FOR F**K'S SAKE!!!  

BreadTalk's Apology

What do I honestly think of BreadTalk's apology and gestures of contrition?  Inadequate, late and self-serving.

I do not believe for one frickin' minute that the $50,000 represents anywhere near the money BreadTalk made from selling the repackaged soy milk, which they started doing in 2014.  Let's do some maths.  BreadTalk has 45 outlets across Singapore, and claimed in a press release that 22 of these outlets always had a Yeo's-branded dispenser so consumers would know that the soya milk came from Yeo's.  So by deduction, 23 stores, more than half of BreadTalk's outlets, were pulling this scam, probably for a good 15-16 months.  That's 11,040 store days.  If you believe that each BreadTalk store sold only four bottles of repackaged soya milk per day, I have a Nigerian friend whose story of dispossession may bring a tear to your eye.

If there was a mite of sincerity behind the $50,000 donation, BreadTalk would have offered to account for ALL of its profits made from this "negligence" (BreadTalk's word) and donate the lot to charity.  The fact they chose a nice-sounding round number like $50,000 merely illustrates the contempt and disregard they have the consumer.  

Oh, by the way, will BreadTalk claim its SG50 300% tax deduction on the $50,000 donation?  Bet you a cup of (genuine) freshly-made soya milk that it will.

What is the Solution?

Maybe easier said than done, but CASE either needs to be given more powers and resources to enforce those powers, or sidelined in favour of a new body which does.

Let's look westwards (or eastwards, rather) to Australia, which has a draconian consumer protection regime.  Under the Australian Competition and Consumer Act 2010, an offender would have been fined three times the value of the illegal benefit it obtained from the deceptive practice.  And the Aussies aren't afraid to use these powers.  In a startlingly similar case, grocery colossus Coles claimed that its bread was "freshly baked in-store", when in actual fact it had been par-baked in Ireland up to months before it was sold.  Coles was convicted by the Australian courts and was fined AUD 2.5 million, ordered to put up signs admitting that it had breached Australian consumer laws and to pay the court costs of the Australian consumer watchdog which successfully prosecuted Coles.  

I argue that Singapore needs to implement a consumer protection regime more along the lines of Australia's, and to give the consumer watchdog significant deterrent powers.  We need to start re-thinking how we regard issues such as consumer rights, and to regard unethical anti-consumer behaviour as being in the nature of criminal conduct (which when you think about it, isn't a million miles away conceptually).

In particular, the consumer watchdog should be allowed to commence prosecutions immediately against offenders upon sufficient evidence / complaints, without the need to go through the dance of the "voluntary compliance agreement" and applying to the Court for an injunction and then complaining to the Court of a breach after the event.  If you are guilty of deceptive conduct, you should be immediately liable to penalties, full stop.  

I bet you any money that if there was a prospect of a seven-figure fine confronting BreadTalk, its managers would have been a lot less "negligent" before deciding to repackage Yeo's soya milk as being "freshly made".  And that is the point.  There is no satisfaction to be gained from retribution, but there is a massive benefit in ensuring that the offence never happens in the first place.

In the meantime, the only effective sanction against BreadTalk is to boycott their products.  I used to be a regular customer at BreadTalk's AMK Hub branch.  Despite the fact that BreadTalk is significantly more expensive than its competitors, I believed in supporting a Singaporean success story.  I also liked the fact that they were continuously innovating and coming up with new products.  Since the news broke, I haven't returned to the shop (nor any other BreadTalk outlet).  I have taken my money elsewhere, supporting smaller family-owned bakeries and saving some cash in the process.

The choice is yours.  Write to your MPs (preferably after the General Election), write to the Ministry of Trade and Industry, make them realise that this is a big and growing issue, and it isn't going to go away.


3 comments:

  1. Lyn Boxall made the following comment on GooglePlus, and I reproduce it below with her kind permission:

    "I agree with the underlying sentiment - that Bread Talk shouldn't be congratulated for doing so little and only after they were caught and faced bad publicity.

    It needs to be mentioned that CASE isn't the government - it's just a charity that is trying to help consumers. It doesn't have any more power to do anything than you or me - i.e. it can ask questions, but it can't force answers. It can be ignored. At least Bread Talk didn't ignore it. And I suppose CASE is starved of financial resources too, so has to pick and choose which issues it escalates to the Courts. It hurts to think of Break Talk meanwhile getting a 300% tax deduction. A better solution would have been if there'd been a way to make them pay the $50,000 to CASE!

    The government did announce a few weeks ago that it is setting up an agency within the Ministry of Trade and Industry that will have investigatory powers (similar to police investigatory powers) and, if I recall correctly, said that it will work hand-in-hand with CASE.

    Obviously not appropriate for being ripped off for a bottle of soy milk, but consumers in Singapore do have legal rights and can take them to the Small Claims Tribunal without hiring a lawyer.

    But I agree that it'd be good if there was an avenue for the equivalent of taking Coles to court in Australia and giving them a fine that might make them thing again next time. That said, I guess the Coles fine wasn't even a rounding error on their balance sheet and therefore simply a cost of doing business. The bad publicity wouldn't even hurt much, because there's so little consumer choice in Australia. The two large supermarket chains receive more than 80 cents of every retail dollar spent in Australia, apparently".

    A great way to start the discussion, and I would welcome readers' views on this topic.

    ReplyDelete
  2. Lyn,

    Thanks for your comment.

    As you say, the Small Claims Tribunal is not an appropriate tool to achieve our ends in this situation. My argument is not so much about the consumer being able to claim compensation through the SCT or otherwise, but having a watchdog with powers and resources to prevent the misleading conduct in the first place. The punishment should fit the crime, and just in the same way that criminals are not allowed to benefit financially from their crimes, companies should also not be allowed to profit from misleading consumers. A fine based on a multiple of that illegal profit is a good way to implement those principles, while providing a suitable deterrent.

    I hadn't heard about the Ministry of Trade and Industry's new agency, and would be glad to learn more about this if you have more details to share.

    ReplyDelete