Nail Palace boss gets jail in first legal move by competition watchdog over unfair practices

The managing director of the Nail Palace group was sentenced to four months’ jail on Sept 9 for contempt of court, the first jail sentence meted out in a move to protect consumers against unfair practices.

Two companies under the group, one running the Bukit Panjang Plaza outlet and the other the Eastpoint Mall outlet, were also each fined $15,000 for contempt of court.

The outlets were found in 2022 to have misled customers, and ordered to stop recommending unnecessary nail anti-fungal treatment to customers.

The outlets were also ordered to take certain steps to notify consumers about the court orders made against them.

But managing director Kaiden Cheng and the outlets failed to comply with the court orders regarding the steps they were supposed to take to notify consumers.

This is the first time that the Competition and Consumer Commission of Singapore (CCCS) has instituted contempt proceedings against an errant business and its manager for breaching court orders, the regulator said on Sept 10.

The CCCS said that it is also the first time that it has obtained a substantial fine and imprisonment sentence against parties that infringed the Consumer Protection (Fair Trading) Act (CPFTA).

The Act, which was enacted in 2003 to protect consumers, does not criminalise unfair practices or provide for penalties to be imposed on errant businesses.

However, in 2016, the law was amended to give it more teeth, with the CCCS empowered to apply to the courts for declarations, injunctions and accompanying orders against errant businesses.

During the parliamentary debate on the amendments, Dr Koh Poh Koon, who was then Minister of State for Trade and Industry, said errant businesses who flout such orders are liable to be charged with contempt of court, a criminal offence which could result in a fine or jail term.

In the current case, the regulator had sought restraining orders against the two outlets following complaints to the Consumers Association of Singapore (Case) by customers who had paid for anti-fungal treatment that they did not need.

Despite Case’s intervention, the Nail Palace group refused to enter into a voluntary compliance agreement to stop unfair practices or compensate affected customers.

In 2022, a district judge declared that the outlets had engaged in unfair practices in relation to the anti-fungal treatment packages.

The judge also ordered Nail Palace to publish details of the court declarations and injunctions in four major newspapers, including The Straits Times.

A third court order was for the two outlets to notify customers for a period of two years about the court declarations and injunctions before entering into a transaction with them.

Nail Palace appealed against the publication orders and the consumer notification orders, but the appeals were dismissed by the High Court on July 28, 2023.

Following the unsuccessful appeals, Nail Palace and Cheng failed to comply with both orders.

The regulator said Nail Palace and Cheng failed to publish details of the declarations and injunctions by the deadline of Aug 18, 2023.

When a notice was eventually published on Aug 31 that year, the printed words “were extremely small and were presented in a practically unreadable manner”, said the regulator.

Nail Palace and Cheng had condensed all 66 pages of the district judge’s judgment into a single page and published four one-page advertisements in The Straits Times, Lianhe Zaobao, Berita Harian and Tamil Murasu.

Nail Palace and Cheng also failed to notify consumers of the declarations and injunctions, as required by the court. 

In November 2023, CCCS initiated contempt proceedings against the two Nail Palace outlets and Cheng, seeking fines and imprisonment terms.

A district judge on Sept 9 found that there had been “continuing, deliberate, egregious and persistent conduct” by the outlets and Cheng, and a “lack of urgency and a cavalier approach” by the outlets and Cheng to comply with the court orders.

The court found that a sentence of imprisonment for Cheng was appropriate as the continuing breaches had prejudiced the public at large.

CCCS chief executive Alvin Koh said it is committed to enforcing the law for the benefit of consumers in Singapore. 

“Unfair trade practices curtail the ability of consumers to make informed choices and CCCS will continue to take errant businesses to task, including seeking fines and imprisonment sentences should they fail to comply with court orders issued under the CPFTA,” said Mr Koh.

Source: Straits Times © SPH Media Limited. Permission required for reproduction.

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