‘Unethical and unacceptable’: CASE condemns oBike’s misuse of customers’ deposits to fund its operations

Using deposits to purchase assets and fund operations would have caused oBike to be hard-pressed to provide refunds without other sources of funding, said CASE.
The Straits Times

The Consumers Association of Singapore (CASE) has described bike-sharing operator oBike’s practice of using its customers’ deposits to fund their operations as “unethical and unacceptable”.

The non-profit organisation said in its statement on Wednesday (Jul 4), that oBike had informed it of its use of consumers’ deposits for the purchase of bicycles and operational funding.

“CASE has communicated clearly to oBike that this practice is unethical and unacceptable, as the refundable deposit acts as a surety for consumers to be responsible when using the bicycle-sharing service, and should not be used for other means,” read the statement.

“Using these deposits to purchase bicycles and fund their operations means that oBike would be financially hard-pressed to provide the deposit refunds to consumers without new sources of funding.”

Since the announcement that oBike would be ceasing operations, CASE has engaged oBike together with the Land Transport Authority.

CASE added that oBike should not have continued to collect more deposits from other consumers on the premise that they are refundable at any point.

As for proper management of deposits, CASE noted that oBike should have kept them in a separate account so that the company could readily issue refunds when required.

It also condemned oBike’s unilateral insertion of a clause that spells out the automatic conversion of consumers’ deposits to an oBike “SuperVIP” membership subscription without consent from bicycle users.

The insertion of the clause in oBike’s Bicycle Rental Service Agreement and the use of deposits to offset the payment of membership fees was a violation of the Second Schedule of the Consumer Protection (Fair Trading) Act, according to CASE.

Under the act, suppliers are prohibited from asserting a right to payment for the supply of unsolicited services.

“We put forth our position to oBike that they should honour their contractual obligations to consumers,” added CASE.

Highlighting oBike’s prior announcement that it would be raising funds from alternative sources to refund consumers’ deposits, CASE said the onus is on the bike-sharing operator to update consumers on its progress.

A refund procedure, with details on whether it would be handled separately from any liquidation proceedings, and an expected timeline, have to be provided as well.

Meanwhile, CASE has advised consumers to be mindful of the risk that their prepayments may be lost in the event of abrupt business closures. It encouraged consumers to minimise their prepayments or seek alternative services that do not require deposits wherever possible.

Read also: oBike blames new rules for Singapore exit, but writing already on the wall

After ending operations in Singapore, oBike has yet to issue refunds to some users and collect remaining bicycles