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SINGAPORE: Who foots the bill for credit card payments – the bank or cardholders – when a service provider makes a sudden disappearance?
The question is being asked after the shutdown of spa operator Wellness Village, which was reported in TODAY on Tuesday.
One customer was told by a former employee that the spa was still selling packages, some as costly as $10,000, up to the weekend before it closed down.
The four-year-old spa is also believed to have up to 7,000 customers and they are wondering about their credit card liability.
"I'm still paying off my instalment plan I paid with my credit card," said a customer who only wanted to be identified as Ms Tan. "Now that this has happened, will the bank take some liability?"
When contacted, the Association of Banks in Singapore (ABS) said the credit-issuing bank has already paid for the customers' purchases and the amount needs to be settled.
ABS said customers should take their grievances to the spa owner. Credit card holders can choose to pay in full or by instalments at some establishments.
"Regardless, the bank has a contractual obligation to pay the merchant in full once the charge slip is signed," UOB regional and Singapore head for cards and payment products Gan Ai Im also told MediaCorp.
"The card member, on the other hand, is obliged to make full settlement of all charges incurred on the card to the bank."
Wellness Village customers can call their card-issuing banks, however, to investigate or dispute the charges.
Said Citi Singapore vice-president of corporate affairs Caren Lee: "We understand the concerns of the customers and empathise with them in this situation."
"To support the investigation, the customer will need to provide supporting documents, including the purchase agreement with the merchant."
Consumers Association of Singapore executive director Seah Seng Choon said it has received 138 complaints from former customers since the spa's closure made headlines.
He said the "first thing the consumer needs to do is to file a claim against the business at the Small Claims Tribunal" to obtain an order demanding the business pays whatever amount is awarded.
This applies to firms that are still "live", such as Wellness Village, as indicated by checks with the Accounting and Corporate Regulatory Authority.
If the amount is not settled, the consumer can make a writ of seizure or other legal action, said Mr Seah. But that could cost more than the amount some customers would forfeit.
Lawyer Doris Chia from David Lim & Partners pointed to another alternative: For customers to "band together" and wind up the company. An official receiver will then look into the accounts and affairs of the company to see if money can be clawed back.
Consumers can also file a police complaint. "If directors of the company continued to trade or accept more payments for packages even though they know there was no chance the company will be able to honour the packages, this ... may render the directors personally liable," said Ms Chia.
- TODAY/so
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