Acting Secretary for Commerce & Economic Development Gregory So says the Government will soon consult the public on legislative amendments to combat unfair trade practices.

Mr So told lawmakers today one proposal is prohibiting the practice of "accepting payments without the intention or ability to supply the contracted goods or services".

"The proposal should help tackle the problem of unscrupulous traders continuing to accept pre-payment notwithstanding the knowledge their businesses are not sustainable," he said.

The Monetary Authority has urged banks to deal with customer complaints and charge-back requests reasonably and pragmatically, and will continue to study with the banking industry ways to strike a fair balance between better protecting consumers from pre-payment risks and avoiding cash-flow problems which may be faced by small and medium enterprises.

On a suggestion to adopt similar measures as Taiwan requiring certain goods and service providers to provide a performance bond when they receive pre-payment from consumers, Mr So said this would involve a host of policy, regulatory and implementation issues and bring drastic changes to the operation of traders and financial institutions accepting pre-payment.

"For example, banks are likely to charge a price for the guarantees they may provide according to the assessed default risk, and small businesses may need to shoulder a higher premium. New establishments may find it difficult to obtain bank guarantees if they do not have past performance records or collaterals," he said.

"In the long run, such requirements may alter the industry structure, thereby reducing the choices available to consumers or raising prices. These are issues calling for careful consideration."