oBike used unreturned deposits for funding bike purchases: CASE

This, and the conversion of deposits to SVIP subscriptions, breached the Consumer Protection Act.

The Consumers Association of Singapore (CASE) is pursuing oBike on grounds of breaching the Consumer Protection Act which prohibits suppliers from asserting a right to payment for the supply of unsolicited services, an announcement revealed. The agency found that the consumer deposits were never intended to be used as a prepayment for future services based on the rental service agreement.

"We were informed by oBike that consumers’ deposits have been used to purchase the bicycles and fund their operations," CASE president Lim Biow Chuan said."CASE has communicated clearly to oBike that this practice is unethical and unacceptable, as the refundable deposit acts as surety for consumers to be responsible when using the bicycle-sharing service, and should not be used for other means." 

The agency also found a clause that says deposits will be automatically converted as oBike Super VIP membership subscription without consent from consumers. Because of the clause that uses the deposit to offset the payment of membership fees, CASE believes that oBike has breached the Consumer Protection Act.

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CASE reviewed the terms and conditions of oBikes services and found that the required bike deposits in order to use the bikes. It is refundable when requested by consumers.

The group, along with the Land Transport Authority (LTA), have been reaching out to oBike after they declared to cease operations.

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

Lim believes that using deposit funds to purchase bicycles and finance their operation will make it hard for oBike to return the money to their consumers.

“We put forth our position to oBike that they should honour their contractual obligations to consumers,” Lim explained. “oBike had earlier announced that they would be raising funds from other sources to refund consumers’ deposits in full.”

Lim urged oBike to update consumers on the progress of the funds raised, the expected refund procedure and timeline. He also reminded consumers to be mindful of their prepayments as it is a risk in abrupt business exits.