This is one of the few times that such a case like makes it to the newspapers.
Of course, we know that this sort of things is pretty rife here: Sim Lim square, car workshops making false insurance claims, various shops all over the place, etc.
People may compare and ask why the authorities only seem to respond to tourists getting ripped off and not locals, but enough has been said on that on the blogosphere.
If this continues unabated, sooner or later Singapore is going to go down.
Why do most people trust Japanese or Swiss products and are willing to pay more for them over Chinese products? Simple. Trust. They trust that the product is built to quality standards and works. And to gain people's trust, one needs honesty. Like not substituting inferior parts or defective goods.
The same things apply to just about any other sector, and as a country even more so for Singapore. We have no resources, relatively little history, and definitely no large market like China that might attract the rest of the world. This means that the only thing that we have to justify paying more than any other regional country is in these soft values - honesty, clean government, stability and such.
Plenty of tourists come here because they want to see somewhere without the corruption and traps normally seen elsewhere around the region.
If we Singaporeans are perceived to be dishonest cheats trying to rip people off, we can soon expect us as a whole - and not just our tourist industry - to be hit big time.