Regulation would paper event braceletsgovern deposit refunds

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A worker organizes Mobike shared bicycles in Jinan, Shandong province, on Friday. [Photo/China Daily]

The Ministry of Transport issued a draft regulation for public comment on Tuesday covering the management of deposits in emerging businesses-including bike-sharing, internet car hailing and car-sharing companies-in a bid to better safeguard users" interests.

The regulation, if enacted, would require that companies charge users a deposit based on their service capability. The total prepaid funds in a user"s account on a bike-sharing platform, for example, would be capped at 100 yuan ($15), while the money for other new transportation business would be less than 8,000 yuan.

The draft regulation makes it clear that users" prepaid funds can only be used for a company"s main business, and may not be used for investment-such as real estate, equity, securities and bonds-or for debt service.

Under the draft, any deposits should be based on agreements, and companies may not misappropriate deposit funds. They should also bear the responsibility of setting aside the deposits in a special account to ensure security and money is available for refunds.

The amount of deposit required of a user of a car-sharing platform should be no more than 2 percent of the average car cost, it said. For a bike-sharing company, it should be within 10 percent of the average bicycle cost.

The draft also would require companies to specify the amount of deposits and the conditions for deducting the deposit in the service agreement signed by the user.

The procedure and time to get a deposit refund should be addressed in a notable place on the platforms, the draft said.

Also, when the user applies for a deposit refund, banks and other payment service agencies must return the money on the same day or the next day after verifying the user"s information.

The draft regulation was created after a number of companies suddenly went bankrupt or became cash-strapped, leading to their failure to refund customers" deposits over the past few years.

In December, thousands of people lined up outside the headquarters of bike-sharing company Ofo in Beijing, demanding refunds after failing to get their money back through the Ofo app as promised.

By the end of December Ofo has received more than 11 million online applications for refunds. Many Ofo users have still not received their refunds, according to recent media reports.

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