Shared-bike company ordered to refund deposits, apologize

A shared-bike company has been ordered to refund bike users’ deposits and publicly apologize in major newspapers and televisions to consumers within 10 days, after a 3-hour public hearing in Guangzhou, Guangdong province.

The defendant, Guangzhou Yueqi Information Technology Co, the company behind Xiaoming shared bikes, is also required to disclose all information on receipts, use and refund of deposits, according to a verdict by Guangzhou Intermediate People’s Court on Thursday.

The defendant was found to have collected about 800 million yuan ($125 million) in deposits from more than 4 million shared bike users. By Thursday, around 500,000 bike users have requested their deposits be returned but have not yet received them, according to the verdict.

The company was brought to court by the Guangdong provincial consumer watchdog last December over accounting irregularities and delays in refunding users’ deposits, after the latter received 2,952 complaints about deposit refunds.

The case is said to be the first public-interest litigation involving shared bikes on the Chinese mainland.

The Guangdong Consumer Council said Yueqi has breached its commitment to return bike users’ deposits on time and misused the money. Yueqi was also accused of having no third-party supervision over its bank account for the deposits.

Guan Bin, the legal representative of Yueqi who replaced his predecessor Deng Yonghao last August, argued the company did not intentionally refuse to refund the users.

Last year, when two major players in the shared bike business offered virtually free rides to users, the company lost a lot of its users who suddenly withdrew deposits, causing the shortage of funds, he said.

The company has been operating in the red last year, and it had not ruled out paying its debts, back pay and taxes through bankruptcy, he added. Currently, new users do not need to pay any deposit.

Both plaintiff and defendant have decided not to appeal to higher courts.

Many shared bike users fell victim to defaults on their deposits when operators went bankrupt. According to Xinhua News Agency, at least six shared bike companies have gone broke.

A report issued by the China Internet Network Information Center in August estimated that users may have paid 10 billion yuan ($1.6 billion) in deposits to use shared bikes.

Chen Tianxiang, a professor at the School of Government of Sun Yat-Sen University, said relevant government departments should improve the management of shared-bike companies and introduce more regulations and rules to further standardize the operation of such companies.

“Meanwhile the legal right and interest of the bike users should also be protected by laws,” he said.