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Tighter controls on transport deposits

By Zhang Yi | China Daily | Updated: 2019-05-17 09:22
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A local resident prepares to use an electric bicycle from an e-bike-sharing service on a road in Shenzhen, South China's Guangdong province, on Jan 5, 2017. [Photo/IC]

Bicycle and car sharing companies must set up special accounts supervised by banks to hold customers' deposits, under a regulation released by the Transport Ministry on Thursday.

The regulation, issued by the ministry and five other departments, is designed to prevent risk to users' money, strengthen protection of their rights and interests, and promote the healthy and stable development of emerging forms of transportation, the ministry said in a statement.

The rule was rolled out after a number of companies went bankrupt or became cash-strapped in recent years, resulting in customers not getting their deposits back.

By the end of December, bike sharing company Ofo had received about 11 million online applications for refunds. Many users have still not received their money back through the Ofo app as promised.

Last month, Ofo denied that it is bankrupt, saying in a statement that debt-related litigation and negotiations are still underway.

The new regulation says that operators are encouraged not to charge deposits. However, if it is necessary to do so, they should be set aside in a special account to ensure they are secure.

Feng Yan, an official from the China Banking and Insurance Regulatory Commission, said the special accounts will prevent companies from directly accessing the deposits. The banks will need the customer's consent when they want their money back or when they want to use it for payment.

Cai Tuanjie, an official from the Ministry of Transport, said the collection of deposits was not banned because they are sometimes convenient for users and also help companies' cash flow.

The regulation stipulates strict requirements for the refund of deposits.

It requires bike sharing companies to charge users a deposit not exceeding 10 percent of the average cost of a single bike. The company should specify the conditions for deducting the deposit.

Deposits paid to bike sharing companies should be returned within two working days after an application is made. The refund period for a car sharing user's deposit should not exceed 15 working days.

The regulation also requires companies to provide quarterly reports on the collection, use and the interest earned on the deposits to relevant departments.

Companies that disobey the order and do not rectify the situation on time will have the details of the infringement made public. Severe violations will be handed to the police.

 

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