Deposit refund back in spotlight

Date: 2017-November-24Writer: Share:

THE deposit refund issue is once again in the spotlight after a recent announcement by bike-sharing startup Coolqi, once positioned as China’s third-most popular shared bike app, that is has run into financial difficulties.

In the public notice Nov. 19, the operator, known for its gold-painted bikes, said its Beijing office has suspended refunding deposits. Bike users who need a refund can apply at the Sichuan office of Sichuan-based Biker S&T Co., which has taken over the company’s operation and maintenance, not including its debts.

Although the company provided three hotlines, users applying for deposit refunds found it was impossible to get through as the lines were always busy.

The company had previously signed a 1 billion yuan (US$150 million) deal with Biker. Since mid-August, users have been complaining about problems refunding their 298-yuan deposits.

Coolqi previously said that the delay in any refunds was due to technical glitches, but an internal notice circulating among employees indicated that the company was facing a funding shortage that was affecting normal operations and payroll.

Another company, Bluegogo, is also in financial trouble after burning through 600 million yuan since it was founded to deploy 700,000 bikes across cities in China. Bluegogo’s offices are locked and abandoned.

According to a Xinhua report, at least six bike-sharing companies have ceased operations or entered bankruptcy in the past months, leaving more than 1 billion yuan in deposits unaccounted for.

At a hearing on the management of shared bikes in Shenzhen, Chen Xi, a political adviser, said it was groundless for operators to require deposits and called for users to take legal actions to get their deposits back.

At the hearing, a representative from the Shenzhen Consumer Council said the council received more than 10,000 complaints about shared bikes, 99 percent of which concerned difficulties in getting deposits refunded.

Although Shenzhen’s transport commission requires operators to open accounts overseen by a third party for the deposits, only two operators, Mobike and ofo, have followed the requirements, while the others ignored the rule.

Coolqi once claimed to have set up an account at China Minsheng Bank, but the bank’s Beijing outlet said it was an ordinary savings account and the two sides hadn’t engaged in substantial cooperation.

Xiaoming bike operator also made a similar declaration this September. Huaxia Bank responded that the company had opened a savings account at the bank’s outlet in Guangzhou, but the bank had no obligation to oversee the account.

“Bluegogo is registered in Tianshui, Gansu Province. It isn’t registered in Shenzhen. We are actively contacting the business registration authority in Gansu to solve the issue,” said Han Hao, department director of the commission, at the hearing.

Wu Chungeng, a spokesperson with the Ministry of Transport, said at a routine news conference Thursday that precautions should be taken to prevent deposit issues concerning shared bikes. The ministry is closely following up on the issue and guiding local agencies to handle disputes caused by the shared bike operators, Wu said.

The ministry has initiated an investigation in cooperation with related agencies in Beijing, Guangzhou, Chengdu and Changzhou and will formulate measures to ensure the healthy development of the industry, according to a Xinhua report.

Editor: Lily A