In around May 2010, True Spa made headlines for leaving its clients in the lurch by closing down whilst clients were still holding on to thousands of dollars’ worth of unused spa packages. Fortunately, fallout from that incident was muted because Subtle Senses, another spa, offered to take over the packages of True Spa’s clients.
Unfortunately, the story did not end there happily. Subtle Senses closed down a mere 6 months after taking over True Spa’s clients. Clients were left in the lurch again. Legally, the clients had every right to claim for the balance of their spa packages in court. Normally, that would mean going to the Small Claims Tribunals to file a claim. However, in this case, doing so might have proven futile as the company was being wound up. As unsecured creditors, consumers may not have been able to get any money after the liquidation process even if they won the case.
In cases like this, there may be the suspicion that the owners of the company deliberately took the more money to line their own pockets even with the knowledge that the company would be liquidated. That may well be criminal and may expose the owners to personal liability. However, this is something that is difficult to prove.
Sadly, it seems like the best way is still for consumers to avoid making too much advance payment, no matter how enticing the deal may be. Mr Yeo Guat Kwang, the president of the Consumers Association of Singapore, has proposed implementing some form of accreditation or regulation for the spa industry. The proposal is spas which take advance payment should either put the money in an escrow account, or buy insurance. However, measures like these will always need time to take effect, and this whole incident only serves to show that consumers can never let their guard down.