Oversight needed for member cards rules

A Shanghai Municipal People's Congress (SMPC) delegate has called on the local government to determine how best to enforce a national regulation that governs prepaid membership cards, the delegate said Thursday.

Although the regulation, which went into effect in September 2012, aimed to curtail consumer losses from prepaid cards, especially in cases in which the issuing business unexpectedly closes, stories about consumers who have lost money on prepaid membership cards have continued to grab headlines in the city.

In one of the higher profile cases, Marie France Bodyline, which ran a chain of body shaping and weight loss centers, did not refund customers who had purchased its prepaid membership cards when it shuttered all of its locations in the city last December.

The Marie France Bodyline case was one of many such cases in the city, said Tan Bing, an SMPC delegate from Jiading district, who also serves as director of the district's commerce authority.

Prepaid membership cards are offered by a wide variety of businesses, such as gyms and beauty salons. Typically, the business asks customers to prepay a specific amount of money for the card in exchange for a set discount on the services they buy in the future. Usually, the more money the customer puts down on the card, the greater the discount he or she receives.

A problem often occurs when a business closes down before customers have the chance to spend all of the money on their cards.

"There is little that can be done after a business goes bankrupt. It is really hard for consumers to get their money back," Tan told the Global Times.

To address the problem, the Ministry of Commerce issued a regulation that required businesses to set aside at least 20 percent of the money they've received for prepaid membership cards over the previous quarter in a dedicated bank account.

Tan said the local government still needs to take action to fully implement the regulation, such as assigning which agencies will oversee its enforcement and make sure that businesses set aside the required amount of money.

"The local regulation should clearly state the division of responsibilities among the different government departments to prevent them from passing the buck," Tan said.

Without proper local supervision, it is likely that the business will lie about how much money they have in reserve for the prepaid membership cards, Tan said.