In an era where fitness studio closures are becoming commonplace, the landscape of consumer trust is being tested. News headlines and online forums are rife with stories of gym bankruptcies, leaving customers stranded and their investments lost.
Consider the case of a young man who, hoping to shed pounds, took out a 150,000 yuan loan for gym membership. A mere month later, the gym shuttered its doors. He was left with the debt and no access to fitness facilities, a story widely publicized. Another instance involves a fitness center using rehabilitation services to defraud a disabled individual out of over 300,000 yuan.
Victims attempting to recover their funds find themselves navigating a maze of unreturned calls, shifting legal entities, and the unmistakable signs of a deliberate fraud scheme. The prevailing model involves gyms selling substantial, long-term prepaid membership cards, generating significant short-term cash flow. Some operate for a year or two, while others vanish within months, leaving customers high and dry. This “get-rich-quick” strategy has fostered a culture of unscrupulous operators who disappear shortly after receiving payments.
It’s a scenario where one might be bench-pressing on a Friday night and find the gym—along with its equipment and proprietor—vanished by Saturday morning.
The industry has even spawned “professional closure agents” who specialize in helping gym owners disappear with their customers’ money. Online commentary reflects a widespread acceptance of these unsettling practices.
This issue extends beyond the fitness sector. Industries reliant on pre-paid services, such as beauty salons, hair stylists, and massage parlors, are also rife with fraudulent schemes. Recovering lost funds from businesses that close down is notoriously difficult.
Filing a police report often yields minimal results, typically leading to time-consuming and costly legal battles. A recent example of this involves an upscale seafood buffet restaurant in Shanghai that closed after accepting pre-payments of up to 300,000 yuan from customers. The authorities were powerless to intervene, as the restaurant had not registered. Such incidents have fostered a sense of wariness towards high-value pre-paid services, with consumers becoming understandably apprehensive.
The challenge lies in addressing unscrupulous business practices, which, if left solely to consumer action, can be arduous and complex. Fortunately, regulatory bodies and companies like Meituan are introducing initiatives like the “Worry-Free Life” program, aimed at mitigating the issues associated with pre-paid services.
Let’s examine the governmental measures being implemented. Starting May 1st, the Supreme People’s Court’s interpretations of laws concerning pre-paid consumer disputes began providing guidelines to address issues in the pre-paid industry.
This includes declaring “no refund,” “lost card replacements,” and “transfer restrictions” clauses as invalid. Furthermore, the regulations address businesses that abscond with funds, holding them accountable and imposing criminal liabilities for severe violations.
Local governments are also taking action. In Shanghai, regulations have been put in place, limiting pre-paid consumer amounts, the durations, and the number of times consumers can use the services. Membership fees are capped at 5,000 yuan, with a maximum service period of two years. Personal training sessions are limited to a value of 20,000 yuan, and stored value cannot exceed 5,000 yuan. These combined restrictions ensure that total pre-paid spending does not exceed 20,000 yuan.
These measures act as a safeguard, warning businesses of potential consequences if they fail to comply with the regulations.
Hangzhou is also embracing innovation in this area.
A friend of mine experienced a gym closure several years ago, and the government stepped in to help, ensuring that customers could still benefit from the services. Now, Hangzhou is using AI to identify and prevent risks.
By analyzing characteristics of businesses with a history of fraudulent behavior, such as frequent information changes, a high volume of complaints, or unusual promotions and large pre-paid transactions, the AI system flags these businesses as potentially risky, providing early warning signals.
These proactive governmental policies are proving effective in confronting consumer issues. Even when fraudulent activities occur, strategies for post-incident remediation are available.
Recently, Meituan introduced the “Worry-Free Life” program, launching in Hangzhou. This initiative is aimed at insuring consumers across various service sectors, including fitness studios, spas, and beauty salons.
The program offers compensation, with the overarching objective of helping customers to recover their money. The “Closure Compensation” component directly addresses consumers’ paramount concern: financial security. For illustration, if a customer purchases a yearly membership through Meituan and the gym subsequently closes, the customer simply needs to provide proof to the platform to receive compensation.
This exemplifies Meituan’s commitment to supporting its users.
In addition to closure compensation, refunds are available to customers who are dissatisfied with the service. Even if a service is discontinued, consumers retain their contractual rights.
It’s important to note that, for services like prepaid gym memberships, customers must make their purchases through Meituan and look for the “Closure Compensation”标识 to be eligible for compensation. Meituan is not responsible for any transactions made directly with the gym owners.
The shift towards online transactions provides a significant advantage. Services like fitness, beauty, and massage traditionally require in-person experiences, and customer satisfaction is hard to measure exactly. The quality of service is subject to variance, meaning a user could have a bad experience.
The resulting inconsistency in service quality can lead to a bad consumer experience.
Combine this with the recurring issue of pre-paid services failures, and you have a situation where consumers are hesitant to invest and quality businesses struggle to compete. The entire industry faces growth limitations and a crisis of consumer trust.
Meituan’s approach essentially provides the industry with a guarantee leveraging its technology and resources, not only from the customer’s side, but also to promote the positive and healthy growth of the industry.
Meituan is also offering “per-use” and “flexible refund” options for various services, including massage, beauty, and childcare.
With the “per-use” cards, there’s little risk of business closures, as services are paid for after consumption. Even with multiple-use cards, unconsumed or expired services are fully refundable, guaranteeing consumer peace of mind.
Furthermore, to encourage participation, the “Worry-Free Life” program offers significant support and subsidies to participating businesses, including online and offline traffic promotion, cost reduction, and brand-specific promotional materials. For businesses, joining the program increases the visibility of their business, builds confidence and shows a commitment to customer service.
In Hangzhou, the launch city, over 6,000 businesses have joined the “Worry-Free Life” program on the Meituan platform, with massage and foot care services reaching 84% and fitness studios about 48.5%.
Meituan’s initiative, is expanding the scope of the service retail industry’s online presence, and enabling standardization. Recently, Meituan’s CEO for core local commerce, Wang Puzhong, highlighted the $7 trillion service retail industry in 2024, noting that its online penetration rate is only 9%. The online transformation of the retail service industry enhances not only channels but also elevates consumer experience and operational efficiency.
Take the fitness sector for instance: The platform’s financial protections boost consumer confidence, driving higher participation and generating more business. Increased consumer engagement, in turn, creates more revenue potential.
Consumer demand is also changing. According to Meituan data, “fitness monthly pass” has become the top search term in the fitness industry.
The era of high-value pre-paid services is coming to an end.
This shift forces supply-side changes. Take Lekang Fitness, its monthly payment plan has been a success with younger consumers, and it compels the business to focus on making the service their fundamental product and making that quality the basis for revenue.
This type of transition and standardization is necessary across the fitness and other service sectors.
Meituan is leveraging its resources to transform service retail, which has been trapped in a cycle of rapid expansion and short-term profits.
The issues with these pay-before-you-experience business models have been prevalent for years, to the point where trust is hard to find. Both the government’s new rules and Meituan’s “Worry-Free Life” program are focused on rebuilding that trust and returning business to ethical practices.
Meituan, because it interacts directly with businesses and consumers, is making these changes directly. They are incentivizing businesses that behave correctly and making it easier for customers to be treated fairly, a service that internet platforms have provided to common customers.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/3536.html
