Mandate safeguards for consumers who buy prepaid packages amid surge in losses, says CASE
Source: Straits Times
Article Date: 06 Oct 2026
Author: Rebekah Chia
Between Sept 10 and 30, the Consumers Association of Singapore said it received 1,610 complaints involving prepayment losses of close to $3.82 million following the closure of fitness businesses.
Singapore’s consumer watchdog has called for mandatory safeguards to protect consumers who buy high-value or long-term prepaid packages.
This comes amid a surge in reported prepayment losses in Singapore in the first nine months of the year, including those from the recent closures of fitness businesses True Fitness, True Yoga and Yoga Inc.
In a statement on Oct 5, the Consumers Association of Singapore (CASE) said consumers reported total losses of $6.69 million from Jan 1 to Sept 30.
This was about 147% higher than the $2.71 million in prepayment losses reported for the whole of 2025, it said.
Between Sept 10 and 30, CASE said it received 1,610 complaints involving prepayment losses of close to $3.82 million following the closure of fitness businesses.
These comprised 1,518 complaints involving losses of $3.78 million relating to the closures of True Fitness and True Yoga, and 92 complaints involving losses of $32,826.73 relating to the closure of Yoga Inc.
CASE said it has assisted affected consumers in lodging their claims and proofs of debt with the relevant liquidators.
It added that the scale of these reported losses underscores the need for stronger safeguards, particularly as consumers are generally treated as unsecured creditors when a business enters liquidation.
CASE president Melvin Yong said the recent closure of fitness businesses and sharp rise in reported prepayment losses highlight the limitations of relying solely on voluntary measures.
“The time has come to introduce mandatory safeguards in sectors involving substantial or long-term consumer prepayments,” he added.
In its statement, CASE called on the Government to adopt three measures to help consumers make informed purchasing decisions, protect their prepaid funds, and promote responsible business practices.
It said that a mandatory cooling-off period for high-value prepaid packages would give consumers sufficient time to consider commitments involving substantial upfront payments and cancel without penalty.
It also proposed that the Government mandate CaseTrust accreditation for businesses in sectors involving substantial or long-term consumer prepayments, including the beauty and fitness industries.
Accreditation would require safeguards such as prepayment protection, transparent pricing, clear contractual terms, proper disclosure and reasonable refund arrangements, it said.
CASE also called for potential cases of wrongful trading to be appropriately investigated and for enforcement action to be taken under the Insolvency, Restructuring and Dissolution Act, where the relevant legal requirements are met.
“This may include circumstances in which the collection of substantial prepayments shortly before liquidation warrants closer examination,” the organisation said.
“Effective investigation and enforcement, where supported by the evidence, would strengthen accountability and provide a meaningful deterrent.”
CASE said the proposals are intended to strengthen the overall consumer protection framework and do not constitute an allegation of wrongdoing against any particular business or individual.
Yong added: “These safeguards should be introduced promptly to protect consumers’ hard-earned money, establish clear and responsible standards for businesses, and give consumers greater confidence when purchasing prepaid packages.”
CASE also cited other jurisdictions which have introduced measures to reduce the risks faced by consumers who purchase high-value prepaid packages.
Taiwan requires fitness centres to provide consumer protection mechanisms, such as trust accounts or performance guarantees, for prepaid fees. The required protection must cover at least 50% of fees collected.
In the UK, businesses operating qualifying consumer savings schemes must safeguard consumer payments through arrangements such as insurance or trust mechanisms, allowing consumers to recover protected funds if the business becomes insolvent.
New York state in the US requires health clubs to provide financial security, such as a bond, letter of credit, or certificate of deposit to protect consumers who prepay for memberships.
Health club contracts are also capped at 36 months, with annual fees limited to US$3,600 (S$4,615). Consumers have three days from signing to cancel their contracts.
Source: The Straits Times © SPH Media Limited. Permission required for reproduction.
292