Is it difficult to refund prepaid expenses? The new regulations are here

2024-04-16

Prepaid purchases of goods and services, but find that the services have shrunk during actual consumption; Merchants promise "free refund" for prepaid cards, but consumers are disappointed when applying... In the prepaid consumption scenario, many consumers have encountered such troubles. The so-called prepaid consumption refers to consumers receiving corresponding goods or services at discounted prices and prepaying fees according to the merchant's marketing plan before delivering the goods or services. In the fields of beauty and hairdressing, fitness and other consumer sectors, prepaid consumption models are more common. But the various chaos under such consumption patterns has also become a bottleneck for people to consume with peace of mind. Recently, the Implementation Regulations of the Consumer Rights Protection Law (hereinafter referred to as the "Implementation Regulations") were officially released. Among them, the Implementation Regulations specify relevant management measures for the prepaid consumption model. "Standardizing prepaid consumption is a key focus of legislation in the Implementation Regulations." Kuang Xu, Director of the Enforcement Inspection Bureau of the State Administration for Market Regulation, introduced that the Implementation Regulations further strengthen the obligations of operators in the prepaid consumption field from three aspects: the first is the obligation to establish a "written contract". Business operators shall enter into written contracts with consumers, specifying the specific content, price or fee, prepayment refund method, breach of contract liability, and other matters of the goods or services. Through written contracts, they shall strengthen the constraints on business operators to abide by their commitments and reduce the difficulty of providing evidence when consumers protect their rights. The second is to strengthen the obligation of "fulfilling the contract". Business operators shall provide goods or services in accordance with the agreement with consumers, and shall not reduce the quality of goods or services, nor arbitrarily increase prices. If the operator fails to provide as agreed, they shall fulfill the agreement or refund the advance payment as requested by the consumer. "In response to situations where operators reduce quality, cut corners, and shrink services, the" Implementation Regulations "for the first time grant consumers the right to terminate contracts. Operators are required to refund not only the balance of the advance payment, but also based on contract performance and breach of contract," said Kuang Xu. The third is to clarify the obligation of "informing during the process". If a business operator encounters significant business risks, they should stop collecting advance payments; If the operator decides to suspend business or relocate the service location, they shall inform the consumers in advance, continue to fulfill their obligations, or refund the balance of the advance payment that has not been consumed. Even if the operator has no subjective fault, it will still result in the inability to perform the contract or significantly increase the cost of consumer performance. The Implementation Regulations also grant consumers the right to terminate the contract. Regarding the common issue of "difficulty in refunding deposits" in consumer scenarios, Kuang Xu stated that although deposits are guarantees rather than prepayments, they also have the form and risk of "prepayment", which can easily lead to refund disputes. "The Implementation Regulations have also made corresponding provisions for the deposit, requiring operators to agree with consumers in advance on the method, procedure, and time limit for refunding the deposit. Unreasonable conditions for refunding the deposit shall not be set, and those that meet the conditions shall be refunded in a timely manner. When consumers breach the contract, the operator's deduction of the deposit should be based on actual losses, rather than simply 'all has nothing'." Kuang Xu said. In addition, the Implementation Regulations specify that for those who violate the relevant provisions on prepaid consumption, the relevant administrative departments shall order them to make corrections, and may impose a single or multiple warnings, confiscate illegal gains, or impose penalties based on the circumstances

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