In brief

The Competition and Consumer Commission of Singapore (CCCS) commenced an investigation under the Consumer Protection (Fair Trading) Act 2003 (CPFTA) against a water filtration system supplier (“Supplier“) for unfair practices between September 2021 and November 2023.

The Supplier was found to be making false claims about its sales kit, misleading promotion listings, and misleading claims on the health benefits of alkaline or filtered water, from its website and social media pages.

Key takeaways

• There is a growing spotlight on unfair consumer practices, including misleading advertisements and greenwashing claims, in Singapore. Brands in the business of selling and supplying goods in Singapore should review all marketing materials to ensure that any assertions directed to consumers are clear, accurate and supported by evidence. Brands should similarly review their business practices to ensure compliance with the CPFTA and applicable consumer protection laws.
• Complaints may be made against errant suppliers by consumers to the Consumer Association of Singapore (CASE). If persistent in their unfair trade practices, they will be referred to the CCCS for investigation. The CCCS is prepared to take the necessary enforcement against errant suppliers who persist in unfair practices under the CPFTA, and in any event, regulators will not hesitate to publish details on the investigations, which would naturally result in adverse publicity. 

In more detail

On 21 March 2024, the CCCS released a statement announcing that it was reviewing the marketing practices, in particular, relating to the accreditation, certification and health benefit claims made by various water filtration system suppliers, as part of its continued market monitoring of the industry.

CCCS had commenced an investigation under the CPFTA against the Supplier, who supplied water dispensers, alkaline water filtration systems and maintenance service packages to consumers, and found that they had engaged in more than one of the following unfair practices between September 2021 and November 2023.

Prior to the CCCS’ investigations, the CASE had received six complaints filed against the Supplier due to general dissatisfaction with their service, including unresponsive communication and failure to fulfil their maintenance agreements with customers. The CCCS had identified the following unfair practices by the Supplier following their investigations:

1. Made false claims that its water filters were tested by testing bodies, in the sales kit used by its salespersons in their sales pitches to consumers
2. Made misleading claims on the health benefits of alkaline or filtered water on their website and social media pages, including claims that alkaline or filtered water can help prevent certain health conditions
3. Misrepresented that its water faucet and water dispenser were free for a limited time in listings on an e-commerce platform, when the price benefit or advantage did not exist
4. Misrepresented to consumers, in the terms and conditions of service agreements, that sums paid for the activation fee and maintenance service package under direct sales contracts were non-refundable, and omitted to inform consumers that they have a right to cancel direct sales contracts under the Consumer Protection (Fair Trading) (Cancellation of Contracts) Regulations 2009 and any sums paid under the cancelled contracts would have to be repaid to the consumers
5. Misled a consumer by giving false excuses for its persistent delay in providing the consumer’s purchased water filters

As a result of the investigations by the CCCS, the Supplier has since undertaken to make changes to their business practices to ensure compliance with the CPFTA, by doing the following:

1. Stop engaging in unfair practices under the CPFTA, including the identified unfair practices identified by the CCCS as above
2. Cooperate fully with CASE to resolve consumer complaints
3. Put in place an internal compliance policy to make sure that its marketing materials and practices comply with the CPFTA
4. Ensure that its staff undergo training to familiarize themselves with the types of conduct that would amount to an unfair practice under the CPFTA and maintain records of the training undergone by each staff

While the CCCS has accepted the Supplier’s undertakings, the CCCS cautioned that it is prepared to take the necessary enforcement actions if the Supplier breaches their undertakings or engages in any other unfair practices.

Practical trends

Recently, we have observed regulators scrutinizing and/or taking enforcement action against brands that engage in unfair practices. In November 2023, the CCCS cited the findings of its study that one in two products sold online had overstated their environmental claims, and thereafter committed to developing a set of guidelines to provide greater clarity to suppliers on what is greenwashing conduct. You may access our client alert here. Shortly after, in December 2023, the Advertising Standards Authority of Singapore (ASAS) found a company in breach of the Singapore Code of Advertising Practice (SCAP) for greenwashing or marketing that exaggerates the sustainability of a product. You may access our client alert here.

It is apparent that in Singapore, there is a growing spotlight on misleading advertising claims, such as claims amounting to unfair practices and/or greenwashing claims.

For breaches of the CPFTA, in addition to consumers being able to commence civil proceedings against the supplier for damages, CASE may also invite the errant supplier to enter into a voluntary compliance agreement, which would contain written undertakings that the supplier would not engage in the said unfair practices.

Sanctions for misleading representations in breach of the SCAP include the withholding of advertising space or time from advertisers; adverse publicity arising from the ASAS publishing details of the outcome of its investigations; and the ASAS may also refer the matter to CASE, in the case of recalcitrant advertisers that repeatedly ignore the SCAP.