Authorities in Beijing have launched the country's first crackdown on illegal store closures that exploit and violate consumers' rights, and have placed two enterprises, three intermediary agencies and two people under investigation, officials said on Tuesday.

The cases have resulted in fines and confiscations totaling 655,800 yuan ($92,100), according to the Beijing Administration for Market Regulation and the Beijing Municipal Public Security Bureau.

Since the start of this year, the practice of hiring so-called "professional store closers", who help prepaid service providers close their businesses and evade debts, has gained national attention. These operators assist unprofitable businesses by changing their legal representatives, transferring assets and avoiding liability to consumers, for which they receive a commission.

Li Lingsong, an official responsible for consumer rights protection at the Beijing market regulator, said these closers often run promotions before shutting down the businesses in order to exploit prepayments from customers.

The illegal closures also leave employees unpaid and consumers without refunds, disrupting economic order. Authorities targeted the entire chain of these operations during their probe, from the businesses themselves to the closers and intermediary agencies involved.

Investigations uncovered two cases of unprofessional closings involving two art training institutions, Art Umbrella and Muyi Art.

In the first case, three intermediary agencies provided services to Art Umbrella, recruiting a debt bearer, surnamed Jia, as the nominal legal representative. The agencies submitted falsified registration documents and concealed important facts. Art Umbrella was fined 100,000 yuan, while the agencies were fined and had their illegal gains — ranging from 700 yuan to 18,800 yuan — confiscated.

In the second case, a person surnamed Han provided similar services to Muyi Art, recruiting a debt bearer, surnamed Zhang, as its nominal legal representative and shareholder. Muyi Art was fined 180,000 yuan, while Han was fined 50,000 yuan and Zhang 10,000 yuan. Authorities also confiscated illegal gains from both of them.

As part of the penalties, the market regulator revoked false registration documents for both institutions and banned nine people from reapplying for business registration within three years.

Since implementing the Single-Purpose Prepaid Card Management Regulation in June 2022, Beijing has heightened its supervision of prepaid cards, covering 28 fields in 14 sectors. The law requires businesses to notify consumers in advance through various channels if they cannot honor prepaid cards due to closure or relocation.

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