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LCQ17: Regulation of online retailers
     Following is a question by the Hon Alice Mak and a written reply by the Secretary for Commerce and Economic Development, Mr Gregory So, in the Legislative Council today (November 30):
     In its Report on Online Retail - A Study on Hong Kong Consumer Attitudes, Business Practices and Legal Protection (the Report) published in November this year, the Consumer Council indicated that it had received 3 000 to 5 000-odd complaints about online shopping in each of the past three years.  The Report also pointed out that the online shopping marketplace had evolved rapidly in recent years, and an effective legal framework would be conducive to the protection of consumers' rights and interests.  In this connection, will the Government inform this Council:
(1) whether the Customs and Excise Department conducted investigations into complaints about the unfair trade practices of online retailers and instituted prosecutions against the relevant retailers, in the past three years pursuant to the Trade Descriptions Ordinance (Cap. 362); if so, of the respective numbers of such cases;
(2) whether it has considered amending the legislation to make it mandatory for online retailers to, in the course of selling goods or services, fully disclose to customers specified information (e.g. (i) the total price of the goods or services inclusive of delivery charges and taxes, (ii) details about the arrangements for cancelling transactions, and (iii) the policy on handling customers' complaints); if so, of the details; if not, the reasons for that;
(3) as the Report has recommended that the Government conduct studies on the merits and demerits of imposing mandatory cooling-off periods for different types of consumer contracts, whether the authorities will consider making reference to the experience of other jurisdictions, and launching a public consultation exercise on legislating for mandatory implementation of cooling-off periods (particularly targeting pre-payment mode of consumption); if so, of the details; if not, the reasons for that; and
(4) whether it knows if the Office of the Privacy Commissioner for Personal Data (OPCPD), adopted measures (including following up complaints and conducting regular inspections) in the past three years to monitor whether online retailers had fully acted in accordance with the law in collecting, retaining and using the personal data of customers; if OPCPD did, of the details; if not, the reasons for that?
     On November 7, the Consumer Council (CC) issued a study report on online retail.  In the report, the CC reminded consumers to be aware of some common problems in relation to online shopping, as it becomes increasingly popular.  The report gave a number of recommendations to traders, encouraging them to strictly comply with the law, adopt good practices and enhance customer services.
     We also noted from the report that while the number of online shoppers in Hong Kong and their expenditures were relatively small, their satisfaction levels were very high.  Those who chose not to shop online were mainly concerned about the leakage of personal data, lacked confidence in the quality of the goods purchased online, or worried about the discrepancy between the actual goods and their descriptions.
     The rights of online shoppers in Hong Kong are currently protected by various pieces of legislation, one of which is the Trade Descriptions Ordinance (Cap. 362) (the Ordinance) enforced by the Customs and Excise Department (C&ED).  With effect from July 19, 2013, the Ordinance prohibits some commonly seen unfair trade practices, including false trade descriptions and misleading omissions.  The Ordinance is equally applicable to traders online and physical stores.
     The Government will continue to keep a close watch on the development of online platforms and review the relevant laws as necessary for the protection of consumer rights.
     Having consulted the Constitutional and Mainland Affairs Bureau, my reply to the three parts of the question is as follows:
(1) Statistics on the number of cases handled by the C&ED in the past three years on suspected contravention of the Ordinance by online traders are as follows:
  2014 2015 January to October 2016
Number of complaints on online retailers received by the C&ED 487 296 451
The aforementioned complaints and cases proactively developed by the C&ED, consolidated into detailed investigation cases 65 4 13
Breakdown of detailed investigation cases:      
- being followed up - - 2
- no proof of contravention of the Ordinance after follow-up 51 2 4
- warnings or advisory letters issued 10 - -
- goods forfeited without prosecution - - -
- initiated prosecutions 1 2 7
- accepted written undertakings 3 - -

(2) According to the Ordinance, a trader who applies a false trade description or omits material information may commit the offence of false trade descriptions or misleading omissions under the Ordinance.

     The definition of a trade description includes "price, how price is calculated or the existence of any price advantage or discount", and the definition of a trade description in relation to a service includes "the method and procedure by which, manner in which, and location at which, the service is supplied or to be supplied".
     In addition, for products in relation to which there is a right of withdrawal or cancellation for consumer, the existence of that right is also material information that may influence the purchasing decision of the consumer.
(3) We notice that different jurisdictions adopt different approaches with regard to whether to provide cooling-off periods for online shoppers by legislation.  According to the report published by the CC, the authorities in the United Kingdom, the Mainland and Taiwan have legislation in place mandating traders to provide cooling-off periods to online shoppers.  On the other hand, the report pointed out that in other countries or territories where e-commerce was booming, such as the United States, Australia and Singapore, there was no legislation compelling traders to provide cooling-off periods for online shoppers.  The report also notes that as online shopping often spanned different jurisdictions, there are practical difficulties in seeking redress and law enforcement.   
     Issues that should be considered in relation to the imposition of mandatory cooling-off periods are controversial.  We will continue to listen to the community's views and take into account the CC's ongoing research on cooling-off periods.
(4) The Office of the Privacy Commissioner for Personal Data (PCPD) handled 11 complaints and conducted 29 compliance checks from January 2014 to October 2016 in respect of the collection, retention and use of personal data by online traders.  In addition, PCPD revised the "Guidance for Data Users on the Collection and Use of Personal Data through the Internet" in 2014; and has been making continued efforts to enhance the education of data users through different channels including talks, workshops, themed websites, etc., so as to promote understanding of the requirements they must comply with in the online collection and use of personal data.
Ends/Wednesday, November 30, 2016
Issued at HKT 14:30
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