Prepaid cards have become a common method for consumers to pay in advance for goods and services, think gym memberships, beauty salons, and other services where you pay upfront. However, disputes over refunds, contract termination, and unfair terms frequently arise.
To address these concerns, the Supreme People’s Court of China has issued the “Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Civil Disputes over Prepaid Consumption,” effective May 1, 2025.
Below are key questions and answers regarding prepaid card consumer protection
What happens if there is a dispute over an anonymous prepaid card?
- If a consumer holding an anonymous prepaid card (a prepaid card that is not registered to a specific individual’s name. This means the cardholder’s identity is not linked to the card in any official records), sues an operator, the court must accept the case.
- If the actual holder of a named prepaid card differs from the registered cardholder but can provide evidence proving legitimate ownership, they can also file a lawsuit.
Which prepaid card contract terms are considered unfair?
The following clauses are deemed invalid under the law:
- “No refund after payment.”
- “No compensation for lost cards.”
- “Restriction on card transfer.”
How can consumers transfer prepaid cards?
- Consumers can transfer prepaid cards to another person by notifying the operator. Once notified, the transfer is legally binding.
- The new cardholder can request services such as renaming or password changes.
- If the card offers unlimited services, the transfer must be done in good faith to prevent misuse that could harm the business.
When can consumers terminate prepaid consumption contracts?
Business Operators:
Consumers can terminate the contract if the business:
- Changes location, making it difficult to access services.
- Transfers its business or contract to a third party without consumer consent.
- Fails to provide promised unlimited services.
- Violates other legal or contractual terms allowing contract termination.
Consumers:
- If a personal issue, such as health problems, makes continued contract fulfillment unfair, they may renegotiate or, if unsuccessful, request termination.
Does the “seven-day no reason return” policy apply to prepaid consumption?
Yes, consumers can request a refund within seven days of payment. However, exceptions include:
- If the consumer has already received the goods or services from the operator or another provider.
- If the business offers a more favorable refund policy, that agreement takes precedence.
What are the rules for refunding advance payments?
- Refund calculations should distinguish between consumer-initiated and business-initiated refunds.
- Specific rules should be in place to balance fairness for both consumers and businesses, including how to calculate refund amounts and applicable interest rates.
What legal consequences exist for businesses that “run away” with prepaid funds?
- If a business collects prepaid funds and ceases operations without fulfilling its obligations, it must provide compensation.
- If it deliberately evades refund requests, it may face punitive damages.
- If criminal fraud is suspected, the case can be handed over to law enforcement.
What types of prepaid cards are covered by this legal interpretation?
- Single-purpose prepaid cards are covered, including physical cards (magnetic stripe, chip cards, paper vouchers) and virtual cards (passwords, serial numbers, biometric-based cards).
- Multi-purpose prepaid cards are excluded due to their complexity.
Consumer Protection Initiatives in Hainan Coming Online in 2025
Hainan province is strengthening consumer protection efforts by establishing 563 Consumer Rights Protection Service Stations and Priority Channels. In 2024, regulatory authorities handled over 439,000 consumer complaints, recovering approximately 12.93 million yuan for affected consumers.
Key measures include:
- Implementing a no-reason return policy for offline shopping.
- Expanding the Online Dispute Resolution (ODR) system to facilitate quick consumer-business dispute resolution.
- Strengthening law enforcement to prevent repeat violations.
Common consumer complaints typically involve clothing quality, online training, and food safety violations, such as counterfeit goods, false advertising, and sales of expired or unregulated products.
Hainan announced plans to enhance regulatory oversight by using AI tools like DeepSeek to analyze complaint trends and improve enforcement against fraudulent businesses.
How to Contact Consumer Protection Services
If you experience issues with a prepaid card, you can take the following steps:
- File a complaint with local consumer protection agencies. In China, consumers can report issues through the 12315 consumer complaint hotline, (Chinese only).
- Visit a Consumer Rights Protection Service Station. These will start to become available in various locations, including shopping centers and tourism areas over the course of 2025.
Prepaid card consumers now have stronger legal backing to fight unfair contract terms, request refunds, and hold businesses accountable.
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