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For: Valerie Shek, 16, The Independent Schools Foundation Academy
Prepaid contracts have become increasingly popular in Hong Kong’s beauty and fitness industry. Consumers are often persuaded to pay thousands of dollars upfront in exchange for discounted prices on long-term memberships.
While this may sound beneficial, it has repeatedly led to financial losses and consumer exploitation when businesses suddenly close or fail to deliver their promised services. Therefore, I strongly believe Hong Kong should ban prepaid contracts for beauty and fitness services.
First, a prepaid contract places consumers at financial risk; once customers have paid a large sum of money in advance, they lose control over their money, given how volatile the market is. For example, a beauty salon or gym could suddenly close, go bankrupt or simply refuse to cooperate.
In 2024, the closure of Physical Fitness, a gym chain, led to more than 1,700 complaints and around HK$60 million in prepaid losses. This shows how these contracts can devastate and hurt ordinary consumers.
The Hong Kong government has also acknowledged that prepaid contracts expose consumers to considerable financial risks. It has noted that they require stronger consumer protection, highlighting the huge fiscal risks they pose.
Second, prepaid contracts encourage unethical sales tactics. As businesses will receive a substantial amount of money before they have to provide any services, employees are often pressured to persuade consumers to purchase the most expensive packages rather than focus on improving the quality of service.
According to city authorities, beauty and fitness services account for nearly 90 per cent of complaints involving improper sales tactics. Individuals often enter into long-term contracts under the pressure of aggressive commercial practices, including a barrage of phone calls and emails over just a few weeks.
I think some may argue that prepaid contracts allow customers to enjoy lower prices and help businesses secure stable cash flow; however, discounts should never come at the consumer’s expense.
The government should look into alternatives that protect both consumers and companies. These include pay-per-visit systems, monthly subscriptions and more.
Against: Allegra Khomara, 16, King George V School
Despite the convenience they offer, prepaid contracts – agreements in which a customer pays in advance for goods or services to be delivered over a future period – are viewed negatively because they require long-term commitment.
The public generally accepts this type of contract for services like phone SIM cards and education programmes. However, over the last six years, there have been about 5,000 complaints tied to prepaid contracts for gyms and beauty parlours in Hong Kong.
One could argue we should ban prepaid contracts for beauty and fitness venues. But these contracts benefit customers because they prevent unforeseen price hikes.
Imagine you are happily paying for a service, but one day, the price increases. You would be annoyed that you did not opt for a package deal where you’d be safe from a price change. And your shoes would wear out from the time and energy you used to find a new, more affordable source: something called “shoe-leather costs”.
Prepaid contracts provide the investment needed in the beauty and fitness industries due to the high cost of rent and equipment. For instance, a treadmill can cost anywhere from HK$20,000 to HK$100,000.
An upfront sum from customers means businesses can make these purchases and use additional resources to improve their services and environment for customers.
Banning prepaid contracts for these industries risks pushing small businesses out of the market and reducing competition.
Competition incentivises businesses to improve their quality and reduce their prices to attract customers. A reduction in the quality of businesses will risk reducing investment in Hong Kong’s wellness markets as customers opt for personalised home gyms or go to major branches and corporations.
Prepaid contracts also protect both businesses and customers. With hundreds of competitors around Hong Kong, having a prepaid contract secures business without worry of customers leaving a gap in their revenue. Additionally, prepaid contracts create an obligation for customers to receive services from a business with flexible scheduling and without worrying about missing a session.
A ban on prepaid contracts risks higher costs, poor quality and fluctuating revenue.
