SPC 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 world's largest online retail market and this has been evolving since 2013. Following the growth, there has been a rapid increase in online consumption disputes. As a result, judicial practice is dealing with new situations and new problems in relation to online consumption disputes.

New Provisions come into force

On 1 March 2022, the Supreme People’s Court (SPC) issued Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in Hearing Cases Involving Online Consumer Disputes (I) (Provisions), effective on 15 March 2022. The Provisions help Chinese courts deal with online consumption disputes, protect the legitimate rights and interests of consumers, and promote a sustainable development of the digital economy.

The Provisions consist of 20 articles, mainly regulating online consumption contracts, responsible subjects of online shopping disputes, live-streaming marketing and takeaway catering services. In this alert we look at some of the key points.

Consumer-oriented protection regarding online consumption contracts

Arti. 1 of the Provisions expressively declares invalid standard clauses that exclude or restrict consumers’ rights, reduce or disclaim e-commerce operator’s liabilities, aggravate liabilities of consumers, or are otherwise unfair or unreasonable to consumers. Such clauses include, notably, "signing for the receipt of goods representing by default that goods have acceptable quality" and "the business operator’s unilateral interpretation or the final interpretation of the contract terms", which have been commonly seen in consumer related contracts.

E-commerce platforms as the responsible subjects of online shopping disputes

The Provisions specify in Art. 4 that e-commerce platforms will bear the liability as the product seller or service provider when conducting self-operated business. This provision expressly clarifies the responsible subject (i.e. e-commerce platform) for self-operated business. In China, many online businesses are operated by an e-commerce platform, such as JD.com, and this provision will urge e-commerce platform operators to control the quality of goods and services provided when conducting a self-operated business. The Provisions further clarify that in the process of sales of commodities or provision of services by business operators on e-commerce platforms, where the employees of the operators guide consumers to make payments through methods other than those provided by transaction platforms, the operators cannot evade but will bear the liability of the product seller or service provider.

Fabrication of transactions, pageviews or consumer reviews

It has been long criticized that fabricated transactions, pageviews and consumer reviews are made to attract attention of consumers and promote sales on e-commerce platforms. Such conducts clearly jeopardize the consumers’ right to know and the freedom of choice. In the Provisions, it is expressively provided that sales contracts entered into by fabrication of transactions, pageviews or consumer reviews shall be deemed invalid.

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

The Provisions stipulate that where the employees of a business operator create false advertising or other conducts, the business operator on e-commerce platforms will be liable for damages. In addition, the livestream room operators will bear the liability of the sellers if they fail to prove that they have clearly indicated they are not the sellers and specified the actual sellers in a sufficiently clear way.

Online live-streaming marketing is a new and popular marketing method in China and it has become extremely popular with the public, while product and service quality have been criticized. The provisions clarify product and service liability and make clear the responsibility for platform operators and livestream room operators to regulate the new online marketplace.

Emphasized food safety protection for the takeaway catering industry

The Provisions specify the examination obligations of the operator of online catering service platforms. If the online catering service platforms fail to perform the examination obligations, they will assume joint liabilities along with the catering service providers. In addition, disclaimer made on the basis that orders are processed by another party under entrustment will not be upheld. Online catering service providers will bear the liability themselves. The development of the takeaway catering industry is promising but controversial for the liability of food safety in China, and the Provisions clarify the responsibility for food safety and protecting the rights and interests of consumers.

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’s good to see that Chinese authorities are determined to promote and improve the development of the online market and regulate counterfeits and defective goods. In the meantime, the Provisions will motivate online business operators, including e-commerce operators, live-stream platform operators, livestream room operators and takeaway catering service providers, to control the quality of the goods and services they provide and fulfil the obligations as specified in the Provisions.