Tan Kin Lian's Blog: Credit risk in making advanced payments

Saturday, April 03, 2010

Credit risk in making advanced payments

Many customers paid a few thousand dollars on spa packages and lose the money when the spas closed down. If you have to pay in advance to enjoy a discount, do not pay for more than three months of services. Do not take the risk of paying for one or two years.

I do not know if the spa closed down due to bad business, or they were set up to deceive the customers. I hope that the authority will investigate if the owners had intended to collect deposits and run away with the money. If money is taken out by the directors for unauthorised purposes, it would amount to cheating. We should not allow this type of cheating to go unchecked.

Tan Kin Lian

8 comments:

Anonymous said...: This is a ponzi.To collect advance payment from unwary customers so that the owner can pay off the suppliers and renovation contractor of the spa. Very similar to life insurance... OPM; April 03, 2010 3:25 PM
Anonymous said...: This is likely to be a scam. The fact that the new owner uses the same premises and is known to the previous owner suggests a link. The CAD should step in to investigate. This is not the first time it happened. The modus operandi and is to change location to somewhere nearby and change the owner who is known or related to each other. This way, they are protected by the law, and they know it and expected the police to be unable to do anything about it. What is more, most times, these are done by PRs or foreigners with assistance from a local person. And our law protects them!!!; April 03, 2010 5:24 PM
Anonymous said...: I thought we are not allowed to gather a group of people to protest.
I guess this law does not apply to
beauty and spa salons, only to
political parties.
Such inconsistencies.; April 03, 2010 5:45 PM
Anonymous said...: In a buyer beware environment, it is difficult to get the money back. My principle is i do not want the discount and pay on consumption basis.

In the past I have dealt with business that started of pretending to be a good customer buying with increasing quantity and paying on time and then the quantity get bigger and bigger and the payment slower and slower then with very big quantity, it closed. the next day, the business owners were still there but the name of the company changes and their wives are the new owners and they become employees. Reported to the police but they said it is a commecial dealing asking us to take private legal action. So many businesses lost millions and nothing happen. My Company wrote off the loss as lawyers advised that it is too expensive to proof fraud. This happen 25 years ago and the same trick is still being used as it is a almost full proof way of making money.; April 03, 2010 6:22 PM
Anonymous said...: As my resources are being drained by the whole life policy that I am paying for (2-3 years is the time I am paying for it), the agent told me my initial coverage of 50k should have swelled to 60-70k...

Sure, on paper only... when you want to claim, I seriously doubt that they are going to pay u your "60-70k". Another bone of contention is that for most critical illnesses, companies will pay u only when u reach certain dangerous levels, its a lifeguard on duty refusing to save you until u are seriously losing consciousness from drowning THEN he jump in. Or like giving u the umbrella after the rain has stopped and you are drenched.The reason these illnesses are termed "critical" is that you MUST prevent them from worsening, which is most helpful and cash is needed at the initial stages.

As I am based in Malaysia, my agent showed me some term insurance with yearly renewal... and only up to 60 years old.

What are the reasonable terms and conditions in buying term insurance, I hope Mr Tan Kin Lian could give us some valuable pointers on this issue.

Thank you.

Confused and frustrated; April 03, 2010 10:11 PM
Anonymous said...: Aiyah! Relax-lah!

Advanced payment is just like giving a political party the mandate to rule a country for 5 years based on election promises.

Something we are all used to.; April 04, 2010 8:22 AM
Anonymous said...: Confused and frustrated
April 03, 2010 10:11 PM,

Your policy amount doesn't grow..I repeat, the coverage doesn't grow.
Check the benefit illustration for the so called 'increasing coverage' and less your cash value which is yours unless they say otherwise. See what you get after minusing the cash value.Is it growing? Is the sum assured growing? If it is , does the insurer pay you the growing sum assured plus the cash value?
No!!!!during claim your cash value is CONFISCATED or FORFEITED .
So what crap your agent is talking about the sum assured is increasing. Don't be conned. It is misrepresenting, misleading and untruthful.; April 04, 2010 11:25 AM
Anonymous said...: when the financial crisis starts, I dare not pay for any package service in case the business goes bust.; April 05, 2010 1:21 PM