Local authorities will use "Big Data analysis technology" to monitor companies that sell prepaid services cards, a senior official said yesterday.
"The current random checks don't protect customers, who are left out of pocket when companies go bust," Shao Zhiqing, vice director of Shanghai Economy and Information Technology Development Commission told Shanghai Daily.
The commission will analyze the daily operations of the companies using "Big Data," such as their monthly electricity and water payments.
"If there are any abnormal signals, the authority will take measures," Shao said.
The Shanghai Consumer Rights Protection Commission received more than 7,000 complaints about prepaid cards last year, compared with 5,800 in 2012.
Using "Big Data technology," the commission will analyze the credit condition of any company that plans to issue prepaid cards.
Companies that have gone bankrupt in the past will not be allowed to reopen with new names, he said.
Prepaid cards are popular among businesses such as gyms, massage chains, and hair and beauty salons. The existing protection scheme requires them to leave a 400,000 yuan ($61,000) deposit in banks as a reserve, but as this can be withdrawn at any time, it is regarded as ineffectual.
Furthermore, only 366 of the more than 100,000 companies that have ever issued prepaid cards are on the records of local commerce authorities, according to the local government.
On Tuesday, the Memory Restaurant chain closed all six of its outlets, leaving hundreds of consumers with worthless prepaid cards.
The company's legal representative Dong Qinggong has disappeared.
The Labor inspection, market supervision and commission of commerce authorities in Huangpu District, where the restaurant had its headquarters, are investigating the case.
A Shanghai TV news report yesterday showed that the company's signage outside the offices had been taken down.
As recently as last month, the restaurant chain was still promoting its prepaid cards, said a former chef who also claimed he is owed wages by the company.
Another employee, surnamed Shan, said the restaurants, which had a 1970s theme, were "quite popular," so he never thought his boss would "suddenly run away."
"There are no harsh punishments for companies that fail to leave records with the commerce authority before issuing prepaid cards," said Fan Lingen, executive deputy chairman of the prepaid card association.
"Violators are fined 30,000 yuan or told to stop issuing cards," he said.
