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October 22, 2013

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Protection for prepaid card customers

ALMOST 40 companies in the Pudong New Area have registered the prepaid cards they issue to customers and placed deposits as security.

This is part of efforts by local commerce authorities to tackle problems with businesses selling customers prepaid cards, then suddenly closing down.

A total of 38 companies have registered prepaid cards, said the commerce commission of Pudong.

“Commercial prepaid cards are conducive to boosting consumption, but there are many problems,” said Qian Huigang, chief of the commission’s marketing department.

Qian said 70 percent of complaints the department received were related to prepaid cards.

Consumers complained that some companies — often beauty and hair salons or fitness clubs — sold them cards then closed overnight.

Last month, Huoli Wuxian Fitness Center in Pudong shut down without warning, leaving members in the lurch — and out of pocket.

The owner is reportedly still missing with the cash.

The Ministry of Commerce last year introduced regulations on prepaid cards, requiring card issuers to register and put down cash deposits to go toward compensating consumers.

Under the regulations, card issuers with revenue of more than 5 million yuan (US$824,715) in the previous fiscal year and issuers with a registered capital of 1 million yuan and operating less than one year should put 20 percent of funds they received in advance in the previous quarter into a deposit fund.

However, the vast majority of businesses are apparently unaware of this regulation, as more than 500 prepaid card issuers in Pudong have not yet signed up to the scheme, said officials.

The commission said it plans to introduce punitive measures to help enforce registration and create a blacklist of problem prepaid card issuers.



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