Law ought to protect members of loyalty schemes

Fruit Day workers process oranges in a workshop in Yunnan province. The company can grade the sweetness of individual oranges at its newly-opened packing plant in Yunnan.[Provided to China Daily]

FRUIT CAMP, a fruit company with chain stores in over 20 cities nationwide, has reportedly closed hundreds of its shops over the past two weeks. Members of the company's loyalty program, who prepaid for products, are now finding it hard to get their money back. This is not the first such incident and the root cause of this problem lies in the judiciary failing to do its duty, says a comment on Beijing Youth Daily:

Prepaid membership programs are popular worldwide, because they help companies get money quickly, while offering some discounts to consumers.

However, the business mode has some prerequisites, namely both sides must follow the rules. The customer has paid for goods or services already so there is no chance of a change of mind. But if the company breaks the covenant and refuses to provide the goods or continue providing services, the customer suffers losses.

That's where the judiciary should intervene. In societies with the rule of law, the company will face severe penalties and pay a heavy price for failing to fulfill its side of such a covenant. It is the duty of law enforcers to prevent companies from failing to meet their promises and ensure such prepaid business models run smoothly.

However, in China the judiciary has failed to protect consumers or punish companies when they break these covenants. Even those companies that failed to honor large debts were able to avoid any penalties until a few months ago when a national database was established. The low cost for companies breaking their covenants with consumers seriously damages the market order and has even encouraged some unscrupulous businesses to cheat their customers.

Besides the judiciary, the legislative body must take some action, too. The law needs to strictly regulate and set out punishments for those companies that fail to provide the goods and services they have been paid for.