A Chinese bike-sharing company is in the hot seat after the country's consumer watchdog ordered it to refund its users following its acquisition by another company.
It is the latest case that highlights the obstacles facing the industry, which had enjoyed fast growth before recently hitting speed bumps that have led a handful of firms to either go bankrupt or merge, leaving consumers, and their deposits, in limbo.
China Consumers Association (CCA) issued a letter on its website on Wednesday demanding Kuqi Bike to assume its responsibilities and square accounts with hundreds of thousands of its 16 million registered users who are yet to get their deposit back.
Kuqi Bike was launched on November 18, 2016, but less than a year later, the company seemed to have hit a dead end.
On September 29, it announced it was being taken over by Biker, another bike-sharing firm in southwest China's Sichuan Province.
It still owns "hundreds of millions" yuan in un-returned down payment to its users, according to the CCA.
The case follow hot on the heels of the trouble in which Bluegogo users found themselves after the bicycle-sharing service provider exited the market. The beleaguered company, the third-largest on the Chinese market before running into financial trouble last month, claimed to have 20 million users in its heyday.
Dock-less bicycle-sharing services took China, and the world, by storm, allowing people to hop on a two-wheeler on the street by scanning a QR using a mobile app they downloaded, then leave it behind anywhere for another cyclist once the ride is over.
But an over-saturated market characterized by a cutthroat competition and meager profits meant that, for some player, the gold rush could not last long.
Users are normally asked to pay a deposit that ranges from 99 yuan (14.5 US dollars) to 300 yuan (45 US dollars) depending on the company before being allowed to use the bicycles.
However, as firms fall one after the other, users' money are at risk of being gone forever.
The CCA said it had received complaints from over 210,000 Kuqi Bike users by Tuesday, noting that the company had listed a fake address for those seeking refunds. Phone numbers the firm made available for its users are also unreachable.
Biker, which also acquired Bluegogo, said that users who registered with Bike Kuqi can continue to use the company's bikes using the same app, but maintained it is not responsible for reimbursing them.
The CCA said the rights and interests of consumers have been compromised, and demanded the company's legal representative and its management step forward and explain the situation, compensate their users, and respond to all public queries.
The CCA also noted that the company has failed to attend two business panels, held on March 23 and December 5, to discuss the bike-sharing industry in the country.
China established a business committee in May to regulate the industry. In August, 10 Chinese authorities including the country's Ministry of Transportation jointly released regulations to supervise and oversee the services of the companies and encourage their business development.
