Tan Kin Lian / Columnist
In recent years, it seems that cheating is allowed. You only need to say “caveat emptor” or “registered” with the XYZ authority.
What is cheating?
According to Wikipedia, “Cheating is an act of lying, deception, fraud, trickery, imposture, or imposition. Cheating characteristically is employed to create an unfair advantage, usually in one's own interest, and often at the expense of others. Cheating implies the breaking of rules.”
Credit linked notes
Recently, more than 10,000 ordinary folks were misled into investing in credit linked notes. They were told that the notes were as safe as fixed deposits.
The prospectus has a warning “you could lose part or all of your savings on a credit event”. However, the investors were advised by the trusted advisers to ignore this warning as the likelihood of a credit event is very remote.
They were also told that the notes were approved by the Monetary Authority of Singapore. Actually, the prospectus said that notes were “registered” with MAS, but the difference between “registered” and “approved” were not clearly explained to them.
It was subsequently found that the nature and risks of the credit linked notes were quite different from what the investors were led to believe. Many people lost their lifetime savings. The total loss was more than $500 million.
SMS premium services
Two months ago, I participated in a free online survey and provided my mobile phone number.
Later, I received regular SMS messages asking me to participate in a contest. If I were careless and reply to the SMS, it would cost me $4 for each contest entry. I had no clue about the prize and chance of winning the contest. I suspected that the payout ratio would be very low, and that could get much better odds by betting on 4D.
After receiving more than 20 SMS messages and avoiding them with great care, I complained to my telephone operator. They “obliged” me by asking the service provider to remove my number from their list. They politely replied that they were not responsible for the service. I do not accept this argument as they probably take a big cut from collecting the monthly fee.
Recently, it was reported that the Consumer Association (CASE) has received several dozen complaints from their customers who were billed $4 for each premium SMS messages received on their mobile phone. Their only mistake was to “subscribe” and “agree” to the first message. They received more than a dozen of unwanted SMS messages each month and were billed over $50.
I suspect that the number of affected customers is several ten fold of the number of complaints, as the number that complained is the tip of the iceberg.
The executive director of CASE was reported to have said that the service provider met the advertising standards and that they are acting within the law.
Is this a correct way to look at this matter? Is $4 a fair value for the SMS message? Suppose the service operator charges $40 or $400 per SMS message, would they still be operating within the law?
CASE is supposed to have a special responsibility in administering the Fair Trading Act. Surely, this type of behaviour by the premium service provider must have contravened some aspects of fair trading? Can we use our common sense of what is right and fair?
Some regulators say that they are not competent to decide on what products or services are good, bad, fair or unfair for consumers. The consumers should “open their eyes” and make an informed decision.
I disagree with this approach. It is the role of regulators to regulate. It is the role of the government to govern.
The people should expect the government to enforce certain standard of conduct in society. They should expect water to be clean, medicines to be safe, criminals are not free to roam the street and businesses do not cheat customers.
I am glad that this caveat emptor approach has not yet been applied in the health sector. I dread the day when toxic products are allowed to be sold freely and the consumer is expected to take personal care in checking the safety of medicines.
How can the regulator decide on the suitability of credit linked notes to be sold to the ordinary folks?
The answer is “asks the expert”. If the regulator appoints a few independent experts to give an opinion about the credit linked notes before they are “registered” to be sold, the answer would be quite obvious. The experts would not be able to understand the product to give it a clean bill of health.
How does the regulator decide on the suitability of the SMS premium services that were being pushed to the customers?
If the service is to be pushed to a large number of consumers, the regulator can check with a representative sample of consumers if the service is useful and fair. Alternatively, the regulator can act and take appropriate action when there is a high rate of complaint about the service. The regulator cannot say, “this is not my duty”.
Cheating is defined as taking an unfair advantage, usually in one's own interest, and often at the expense of others.
The creator of the product and service has better knowledge than the ordinary consumer that is being sold on the product. They should be expected to uphold a standard of fair dealing, and not allowed to take unfair advantage at the expense of the consumer.
If the provider of the product or service takes an unfair advantage, they should be investigated for the offence of cheating. The offence could be misrepresentation, mis-selling or over-charging. The offenders cannot be allowed to get away under the concept of “caveat emptor” or “let the buyer beware”.
We have to return to the old values of honesty. We should expect business to be conducted on ethical standards, so that customers can trust the business to be fair and ethical. We have to stop cheating.