SCC issues new provisions on online consumer disputes in China

With the development of the digital economy, accelerated by COVID-19, online shopping has become a basic tool for consumers in recent years. Indeed, China has become the largest online retail market in the world and this has been changing since 2013. Following the growth, there has been a rapid increase in online consumer disputes. As a result, judicial practice is faced with new situations and new issues related to online consumer disputes.

New provisions come into force

On March 1, 2022, the Supreme People’s Court (SPC) issued Provisions of the Supreme People’s Court on Several Issues Regarding Law Enforcement in Courtroom Cases Involving Online Consumer Disputes (I) (Provisions) , effective March 15, 2022. The provisions help China’s courts handle online consumer disputes, protect consumers’ legitimate rights and interests, and promote a sustainable development of the digital economy.

The provisions consist of 20 articles, mainly regulating online consumer contracts, responsible subjects for online purchase disputes, direct marketing and take-out catering services. In this alert, we take a look at some of the key points.

Consumer-focused protection for online consumer contracts

Arti. 1 of the provisions expressly declares invalid standard terms which exclude or restrict the rights of consumers, reduce or decline the responsibilities of the electronic commerce operator, increase the responsibilities of consumers or are otherwise unfair or unreasonable for consumers. These clauses include, inter alia, “the signature for the receipt of the goods representing by default that the goods are of acceptable quality” and “the unilateral interpretation of the commercial operator or the final interpretation of the terms of the contract”, which have been commonly seen in consumer-related contracts.

E-commerce platforms as subjects responsible for online purchase disputes

The Provisions specify in Art. 4 that e-commerce platforms will assume liability as a seller of the product or provider of services when performing a stand-alone activity. This provision expressly clarifies the responsible subject (i.e. the e-commerce platform) for stand-alone businesses. In China, many online businesses are operated by an e-commerce platform, such as JD.com, and this provision will encourage e-commerce platform operators to control the quality of goods and services provided when they run a self-employed business. The provisions further specify that in the process of the sale of products or the provision of services by commercial operators on e-commerce platforms, when the employees of the operators guide consumers to make payments by methods other than those provided by the transaction platforms, the operators cannot evade but will assume the responsibility of the seller of the product or the service provider.

Manufacture of transactions, page views or consumer reviews

It has long been criticized that fabricated transactions, page views, and consumer reviews are done to grab consumers’ attention and promote sales on e-commerce platforms. Such behavior clearly compromises consumers’ right to know and freedom of choice. In the Provisions, it is expressly provided that sales contracts concluded by the fabrication of transactions, page views or consumer reviews shall be deemed invalid.

Platform operators and live streaming room operators are responsible for online live streaming marketing

The provisions state that where employees of a commercial operator create false advertising or other conduct, the commercial operator on e-commerce platforms will be liable for damages. Furthermore, live streaming venue operators will take responsibility for sellers if they fail to prove that they have clearly stated that they are not the sellers and specified the actual sellers clearly enough.

Live online marketing is a new and popular marketing method in China, and it has become extremely popular with the public, while the quality of products and services has been criticized. The provisions clarify liability for products and services and clarify the liability of platform operators and live-streaming room operators to regulate the new online market.

Enhanced food safety protection for the takeout industry

The Provisions specify the review obligations of the operator of online food service platforms. If online catering service platforms do not comply with the review obligations, they will bear joint and several liability with the catering service providers. In addition, a disclaimer based on orders being processed by another mandated party will not be complied with. Online catering service providers will take responsibility themselves. The development of the take-out industry is promising but controversial for China’s food safety responsibility, and the provisions clarify the responsibility for food safety and the protection of consumer rights and interests.

In conclusion, the provisions reflect the judicial support provided by the courts to protect the legitimate rights and interests of consumers and also to promote a healthy and sustainable development of the digital economy. It is good to see that the Chinese authorities are determined to promote and improve the development of the online market and to regulate counterfeit and defective products. In the meantime, the provisions will encourage online business operators, including e-commerce operators, live-streaming platform operators, live-streaming room operators and take-out food service providers, to control the quality of the goods and services they provide and to fulfill the specified obligations. in the Provisions.

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