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My friend was horrified when he came across news that outlet.com.sg had went bankrupt. Over 600 consumers and merchants have taken their grievances online. They operate similarly to Groupon, and he had bought things from them previously, such as gelato buffets. On hearing the news, we went to check if we had any unused coupons, which thankfully we didn’t. But what will happen to those that do.
The coupon business has been the darling of online shoppers over the last two years. Their short titles grab your attention with “Daily Deals!” and “70% off!”. The deals are no longer as valued for money and many are of the same types: ‘dubious’ travel packages or spas, facials, and bikini waxes! Too many new players, less interest by consumers spells trouble and it appears that the first sign of the bubble popping has appeared with Outlet.com.sg filing for bankruptcy. Yet, only in June, Outlet.com.sg was ranked the 5th highest coupon website in Singapore and there are many more that I have never heard of.
Apparently, since 10 Aug 12, Outlet.com.sg has been placed under liquidaton and there have been many complaints of consumers who have paid but not receive their items.
What you should do if you have unused Outlet.com.sg items:
- Join the Outlet.com.sg Victim facebook page
- Check with Raffles Corporate Consultants if your item is listed as delivered prior to the filing of insolvency. You may have a chance of retrieving it. This was stated from the website.
- Check with your bank or Paypal if you paid by credit card and attempt file a dispute claim. They might be willing to refund you the money. Comments from facebook indicate that successful refunds were obtained from AMEX and POSB. So at least try and see how it goes.
- Else, you can choose to file a Proof of Debt (Form 77) for Company Liquidation through IPTO (http://app2.ipto.gov.sg/) Direct link to the form is here. It will cost you $8.
Unless it can be proven that Outlet.com.sg was involved in fraudulent conduct of their business, otherwise under Singapore regulations, once a company has filed for insolvency,
“ their assets would be handled by an independent appointed liquidator. The liquidator would then investigate into the company’s affairs and the conduct of the company’s officers, and make the appropriate recovery from them. All business is ceased and the assets/goods are frozen for computation and distribution. Consumers are considered unsecured creditors and they are paid on a pari passu basis, i.e. they are paid out of the company’s assets equally. Any balance is then distributed among the contributories of the company ”
For the distribution of assets, it would be in accordance to:
“ Section 328 of the Companies Act in the following order:
- Costs and expenses of winding-up, including the taxed costs of the petitioner and the remuneration of the liquidator
- Wages or salary including allowance or reimbursement
- Retrenchment benefits or ex gratia payments under employment contracts
- All amounts due in respect of workmen’s compensation under the Workmen’s Compensation Act accrued before, on or after the commencement of winding-up
- Contributions payable by the company as an employer
- All remuneration payable to any employee in respect of vacation leave, accrued in respect of any period before, on or after the commencement of winding-up
- All tax assessed under any written law before the commencement of the winding-up or assessed at any time before the time fixed for the proving of debts has expired ”
And lastly, the unsecured creditors otherwise known as the consumers.
By that time, hopefully there are still some scraps for the consumers, so that’s why my advice really is to not cry over spilled milk. Take it as a lesson (albeit painful) in life and move on. If you are angry and think that I’m just making snide remarks or 风凉话. I just want to share that I have also been a victim of companies that had folded. It was the case of Frankel Motors and my first car purchase in 2008. The episode left a nasty unpleasant taste in my mouth for months. Suffice to say, I lost my deposit after the protracted saga and really, on hindsight, there was not much I could have done about it other than to move on.
So What’s Next for Other Consumers?
Beware of the domino effect. Now that the first has fallen, it just shows that this business model may not be that ideal and we may start to see more such coupon companies follow in the footstep of Outlet.com.sg. If you already have coupons, use them soon!
CASE executive director Seah Seng Choon said, “Consumers should conduct research to ensure the credibility of the business and find out how the group buying system works before making any purchases.” I feel that the Consumers Association of Singapore has really not much power in such instances. In fact, the only resolution from CASE is through meditation and that involves the consent of two parties. CASE could be useful when the company you have a complaint against has a reputation to keep. But in this case for Outlet.com.sg, nothing is left and consumers are out of luck if they pursue this venue.
End of the day, buyers need to be savvy and realise what they are in for. Quite a few comments on the internet suggest that the authorities should step in to prevent such incidents. My opinion? The internet is a free market. Its like buying an iPhone from a Nigerian seller that wants you to transfer him the money first. Would you do it? Since the start of commerce, there have been business deals falling through, bankruptcy being declared, and its normal. Is it fair? I don’t know but I know for sure that is legal. Bankruptcy laws are designed to protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. Thus, whenever we enter into a transaction, we, the consumer, actually undertake a risk that the deal would not materialise or well, that you acquire a ‘lemon’. Luckily now, there is the lemon law. But for instances where the company declares bankruptcy, this is not going to help you either. And this risk, is exactly the advantage of buying from a reputable dealer, because the risk of them closing or putting their reputation at stake is reduced. Reputation counts and that is why, some people only buy and/or willing to pay more from the bigger, better established companies. Does this mean I am going to stop buying cheap items off unknown sellers from eBay? Nah, but I would be more careful when it comes to more expensive items.
This is a sad day for e-Commerce especially with the growth we have seen in years but its a painful reminder for us to be careful of the risks of internet shopping. Caveat Emptor – Let the buyers beware.