oBike's usage of customer deposits to fund operations 'unethical': CASE

oBike's usage of customer deposits to fund operations 'unethical': CASE

oBike east of Singapore
This abandoned oBike was found along Telok Kurau Road. (Photo: Amir Yusof)  

SINGAPORE: Bike-sharing operator oBike’s usage of its customers’ deposits to purchase bicycles and fund operations is “unethical and unacceptable”, the Consumers Association of Singapore (CASE) said on Wednesday (Jul 4).

As of 5pm on Wednesday, CASE had received 1,044 complaints from consumers asking for a refund of their deposit with oBike after the operator’s shock announcement last week that it was ceasing its operations in Singapore.

The majority of the complaints were lodged within the last week, CASE said.

“Since the announcement that oBike would be ceasing operations, CASE has engaged oBike together with the Land Transport Authority (LTA). We were informed by oBike that consumers’ deposits have been used to purchase the bicycles and fund their operations,” CASE said in a statement.

“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.”

CASE said that using these deposits to purchase bicycles and fund its operations means oBike would be hard-pressed to provide refunds without new sources of funding.  

Under oBike’s terms and conditions, riders would have to pay a deposit before they could use an oBike. The operator is contractually required to refund the deposit back to the rider's account when requested.

“The deposit was never intended to be used as prepayment for future services,” CASE said. “As such, the deposit ought to have been placed in a separate account to allow oBike to refund consumers when required. The deposit should not be used to purchase assets and/or fund other operating expenses.

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

oBike announced last Monday that it would wind up its operations in Singapore, citing difficulties in meeting LTA’s new requirements, which were implemented to tackle indiscriminate parking.

Since then, hundreds of worried customers have sought to get back their deposits, which adds up to US$4.6 million (S$6.3 million) in total, while oBike scrambles to retrieve its fleet of 70,000 bicycles that have been left abandoned in public areas islandwide.

Meanwhile, CASE warned consumers that there is always a risk that their prepayments may be lost in the event of abrupt business closures. It encouraged consumers to minimise such prepayments or look for alternative services which do not require such deposits wherever possible.

Source: CNA/ec