“Free” services hide “extra” traps

Today, our store is holding a brand ambassador lottery event, and congratulations, you’ve been selected! You’ll receive a full year of 36 complimentary beauty treatments without any hidden fees for services, materials, or labor… However, in recent years, various marketing campaigns promoting “free treatments for a year” have popped up in hair salons, beauty clinics, and wellness centers across the country. Yet, when eager consumers walk through the door, they often find themselves faced with unexpected fees disguised as “deposit” or “good faith money.”

Many customers believe these so-called “deposits” or “good faith fees” are simply a way for businesses to collect hidden charges, which contradicts the principle of fair business practices. Some merchants argue that these fees are intended to ensure customers follow through on their appointments and avoid wasting resources. They insist that such payments aren’t mandatory, but rather a choice offered to consumers.

The lure of “free” services hides a catch, with deposits acting as a means of locking in customers. Miss Chen, a resident of Chaoyang in Beijing, randomly became a “lucky winner” of a beauty clinic’s promotional lottery. In mid-July, she received a message stating that she had won a year of 36 all-inclusive beauty treatments at a salon she used to visit, completely free of charge.

Excited by her unexpected fortune, Miss Chen was disappointed to discover that things were not as straightforward as she had imagined upon arriving at the salon. According to her account, the staff first asked for a 38 yuan “reservation fee” to secure her prize, promising that it would be fully refunded once she activated her treatment plan. However, when she returned to the salon to claim her refund, sales personnel pressured her to pay a hefty “deposit,” claiming it demonstrated her commitment to completing all 36 treatments and was necessary in order to enjoy the complimentary services. Faced with this sudden and unexpected expense, Miss Chen felt confused.

After learning about Miss Chen’s experience, I conducted an undercover investigation at the same beauty salon to see this “good faith” sales tactic firsthand. At the salon Miss Chen mentioned, I encountered similar sales strategies. A so-called “expert” informed me that to ensure clients arrived on time for their treatments, a deposit of 6,980 yuan was required. When I requested to see a contract with their official stamp, the “expert” quickly took it back, refusing to allow me to take any photos.

During subsequent discussions, when I questioned the salon’s management about the basis for charging a deposit, they candidly admitted, “It’s actually a way to keep in touch with consumers.”

According to Chen Yinjian, Deputy Secretary-General of the China Law Society’s Consumer Rights Protection Research Society, “From a normal business perspective, if the service were truly free with no conditions attached, there wouldn’t be a minimum service requirement. The more services a consumer uses, the higher the merchant’s costs, which contradicts common business logic regarding maintaining operations and profitability.”

Searching for “beauty,” “lottery,” and “deposit” online revealed that this type of marketing ploy is far from new; it first emerged around 2018. Along with “deposit,” the term “good faith money” also appears frequently.

Chen explained that if a business collects a “deposit,” it comes with clear legal obligations—should the consumer back out, they lose their deposit, while the business must return double the amount if they breach the contract. However, the terms “deposit” or “good faith money” as used here are not legally precise. “This practice can be misleading and could even amount to fraud,” he noted.

Vague contract terms lead to disputes, making the path to refunds complicated. Further investigation revealed these marketing strategies share a striking resemblance: they exploit consumer psychology by using “free services” as a façade for hidden charges. Businesses often lure customers with a low “reservation fee,” creating an enticing atmosphere designed to coax them into paying large “deposits” or “good faith money” and signing contracts.

Consumers frequently struggle to fully comprehend stringent refund conditions buried in these contracts, including mandatory treatment frequencies within specific timeframes and other obligations like sharing referrals or acting as brand ambassadors. Refund policies, however, are often vaguely defined.

Chen emphasized that such arbitrary contractual clauses often aim to limit business liabilities while shifting the burden onto consumers, clearly undermining the principles of fair transaction. Under Chinese consumer rights protection laws, businesses are prohibited from using these types of terms to evade their obligations or burden consumers unfairly.

So, once consumers struggle to complete all treatment sessions, can they really get their money back? A search through consumer complaint platforms like “Black Cat Complaints” revealed numerous cases of customers trapped in long, drawn-out refund disputes. Reports included instances of businesses promising six complimentary facials for a 999 yuan deposit but failing to return it later, and customers who paid deposits for extensive services only to face evasion tactics when seeking refunds after fulfilling the terms.

While the road to enforcing consumer rights may be challenging, it is not without avenues of relief. Local judicial bodies, regulatory agencies, and consumer protection organizations are increasingly responsive to such consumer traps and refund challenges, working to establish robust protections for consumers.

In late 2022, in Shanghai, Ms. Ye sought a refund for a 7,000 yuan deposit after having second thoughts, only to face delays. Regulatory authorities quickly intervened, successfully assisting her in recovering her funds after a two-month wait.

In July of this year, the consumer committee in Guangzhou’s Baiyun District disclosed a case of a dispute over “free beauty services.” A Ms. Lin, misled by a “winning” message offering free treatments, ultimately found herself in a refund quandary when hefty deposits were revealed. The consumer committee’s mediation resulted in a full refund agreement from the establishment.

Recently, the case of Ms. Wang from Changsha highlighted crucial lessons on consumer rights. After falling prey to a “36 sessions with full refund” scheme where she paid a 3,980 yuan good faith deposit, the salon frequently denied her service, ultimately leading to a lawsuit. The court ruled in her favor, ordering the salon to refund her entire good faith deposit.

As consumers continue to pose questions online about whether winning such offers is a trap, Judge Li Shijiang from Changsha emphasized the importance of honesty in business. He noted that many businesses lure customers with promises of rewards or refunds based on consumer behavior. He stated, “If businesses offer incentives under specific conditions, once an agreement is reached, they must honor it in good faith and not create obstacles that prevent fulfillment.”

For consumers looking to avoid falling into “free service” pitfalls, Judge Li advises a rational and cautious approach. They should research thoroughly before making purchases, not relying solely on sales personnel’s verbal assurances. It’s crucial to scrutinize seemingly advantageous offers, maintain communication records, and keep contracts as evidence to protect against misleading sales tactics.

Addressing these consumer issues, Chen Yinjian called for intensified investigation into the authenticity of claims regarding “free services.” If businesses are merely using “free” as a lure to mislead consumers, regulatory authorities should apply relevant laws to punish such deceptive practices. He emphasized the need for more frequent oversight and stricter enforcement actions against any violations that harm consumer rights, suggesting that warnings and publicizing consumer alerts could create a more transparent market environment.

Chen also encouraged consumers to seek out reputable establishments and verify their licenses and credentials before engaging in transactions. By leveraging online resources and third-party reviews, consumers can better gauge merchants’ reliability. They should also avoid being swayed by verbal assurances alone and ensure that contracts specify product quantities, service details, pricing structures, and return policies, keeping all relevant payment and agreement documentation for future reference.