Easy targets? Maids enticed by Lucky Plaza jewellers' 'S$0 upfront' deals buy gold to pawn for cash; some struggle to repay debts
SINGAPORE — The glint of gold is apparent around Lucky Plaza, where a total of 39 jewellery shops span the Orchard Road mall’s seven storeys.
- Some foreign domestic workers in Singapore have taken to getting cash "loans" without going through licensed moneylenders
- They buy jewellery via instalment plans with no upfront deposit, before proceeding to pawn them for cash
- However, some are unable to repay pawn shop loans and instalments owed to jewellery stores that may charge a high interest on their items
- Concerns have been raised about whether these stores are taking advantage of financially vulnerable workers
- A migrant workers’ rights group urged employers to speak to their domestic workers to prevent them from getting into such situations
CONCERNS OF 'EXPLOITATION'
One employer, a 49-year-old in the finance industry, found out last month that his domestic worker had pawned a piece of gold jewellery for cash without completely repaying her instalments to the jewellery shop.
He did not want to be identified due to a dispute with the jewellery shop.
A pawn shop at Lucky Plaza had sent a letter to his address to inform the maid that her item would soon be forfeited if she did not repay her loan.
This was in line with how pawn shops operate — they typically offer a loan amount based on the value of the pawned item, and would later keep and sell the item if the loan is not repaid.
However, the employer expressed concerns that jewellery businesses might be "exploiting" these foreign domestic workers' financial vulnerability by charging high interest rates on their products, capitalising on their lack of knowledge of the prevailing market rates.
He said that his helper had "unknowingly" agreed to pay more than two times the market rate of gold for a piece of gold jewellery over three monthly instalments.
Additionally, when TODAY spoke to the sales workers at two shops in Lucky Plaza that offer instalment plans with zero upfront for gold jewellery, their staff members said that their shops do not allow Singaporeans to pay by instalments.
The owner of one such store, which also sells mobile phones and handbags, said that this was because the instalment plans were meant only to help foreign domestic workers who had "very low" salaries.
"It’s for them to be able to afford a piece of gold. For them to pay cash, it’s quite difficult… When we do hulugan (instalment), it’s easier for them to take," he said, adding that he did not want to be named for fear of being seen as running a dodgy business.
He added that he was aware of migrant workers who would buy gold jewellery from his store just to pawn them, but claimed that he would not sell to these customers, who often choose "heavyweight" items without bothering to try them.
Such customers are the "exception", he said, noting that the majority of migrant workers do not have trouble paying their instalments — though he declined to give a figure.
In any case, targeting an "economically weaker class" of workers does not run afoul of the law, a lawyer here said.
Mr Anil Balchandani of legal firm Red Lion Circle added that there is a maximum interest rate of 48 per cent per annum for moneylenders.
However, the practice of these jewellery stores providing instalment payment plans appears to be a form of hire-purchase agreement instead, where the balance of money owed is spread out over a fixed period.
Lawyer Ronald JJ Wong of law firm Covenant Chambers said that it is possible such an arrangement constitutes unfair consumer practices under the Consumer Protection (Fair Trading) Act, if a supplier knows that the consumer is not "reasonably able to understand the character, nature, language or effect of the transaction".
MORE OPEN COMMUNICATION NEEDED
In response to TODAY’s queries, the Centre for Domestic Employees said that it was "aware of the potential exploitation of financially vulnerable migrant domestic workers" and that it has "escalated the situation to the relevant authorities".
The centre also urged employers to keep a lookout for any signs of distress that their domestic workers may face, and remind them to err on the side of caution when engaging with financial service providers.
TWC2, the migrant workers’ rights group, said that foreign domestic workers can be particularly vulnerable and fall prey easily to "supposed deals that sound too good to be true to the rest of us", since they might already be in debt upon arrival and lack financial literacy.
"As a society, we need to do better to protect the migrant worker population against exploitation," the group said.
"For migrant domestic workers, it starts at home through a culture of open communication and understanding, so that our helpers feel comfortable sharing their problems, which we may potentially be able to help with before they resort to risky solutions."
Agreeing, Ms Miranda the domestic worker said that she has heard numerous cases of her fellow Filipinos getting into moneylending troubles, and believes that such open conversations can help, along with financial education.
She noted, however, that it can be hard for maids to have that conversation with their employers more than once, especially if it involves asking for a salary advance.
"I (would) feel shy or embarrassed to keep asking... if it happens a few times, I think for the employers, it's also not nice."
Ultimately, she believes that some individuals need to take responsibility if they willingly spend more than they earn, and make use of such practices without considering its consequences.
In those cases, she said, "they can only help themselves".