The China Consumers Association (CCA) criticized the Beijing-based bike-sharing company Kuqi in an open letter released on Tuesday and urged it to refund customers' deposits and issue a public apology.
Kuqi was also asked to provide details on the amount of deposits it has and how it manages prepaid funds, among other issues, according to the letter posted on the CCA's website.
The bike-sharing provider should cooperate with relevant departments in the process of collecting evidence during the investigation and shoulder legal responsibility, the post stated.
Kuqi has almost 16 million registered users, many of whom have given deposits to the company, according to the results of an initial investigation by the CCA. The association said that the company had failed to handle the deposits appropriately.
Kuqi charged users as much as 298 yuan (.2) for deposits.
As a result, deposits of hundreds of millions of yuan were not refunded as promised according to the company's terms and conditions. Kuqi also set up obstacles for the refund process, the CCA post pointed out.
"This open letter is also meant to remind other market players in the sector to operate according to regulations," Zhang Zheng, an employee at the CCA, told the Global Times on Tuesday.
As of Monday, the CCA had received 672 calls and more than 1,500 letters from Kuqi's consumers asking for refunds of their deposits and prepaid fees.
As for other bike-sharing companies, the CCA is monitoring their status and will issue similar letters if necessary, Zhang noted.
The Ministry of Transport and nine other government departments jointly released guidelines on August 3 to regulate bike-sharing services, which stated that companies that charged deposit and prepaid service fees should strictly manage dedicated funds under the supervision of authorities.
Implementation of the guidelines regarding deposit supervision has not been clear enough.
"With deposit issues emerging and raising concerns, it is inevitable to have more specific regulations. There will be legislation regarding deposit issues," Chen Liteng, an analyst at the Hangzhou-based China e-Business Research Center, told the Global Times on Tuesday.