On May 1st, 2021, Measures for the Supervision and Administration of Online Transactions (“Measures”) came into effect, with a view to regulating online transaction activities, maintaining the order of online transactions, protecting the legitimate rights and interests of all parties to online transactions, and promoting the sustainable and healthy development of the digital economy.
As mentioned within the Measures, online transactions include business activities involving the sale of commodities or provision of services through information networks such as the Internet. In addition, business activities involving the sale of commodities or provision of services in information network activities such as on social networking sites and via live streaming are also to be considered as online transactions.
Protection on Personal Information
In 2013, the Law on the Protection of Consumer Rights and Interests stipulated that consumers are, while purchasing or using goods or receiving services, entitled to the protection of their personal information. Under the current Measures, the protection of consumers’ personal information have become increasingly more detailed.
For each online transaction operator, when they are collecting or using consumers’ personal information, they shall follow the principles of legality, legitimacy and necessity, expressly indicate information collection or use purpose, its manner and scope, and obtain the consent of consumers, while disclosing the collection and usage rules without violating laws, regulations or any bilateral agreements.
In addition, the online transaction operators are not allowed to directly or indirectly force any consumer to agree to the collection or use of information not directly related to business activities by means of an one-off general authorization, default authorization, bundled authorization, cessation of installation and use, etc. If the transaction operators want to collect or use sensitive information such as personal biological characteristics, medical and healthcare, financial accounts and personal whereabouts, they need to obtain the consumers’ consent on an item-by-item basis.
Platform Operators
The Measures regulates online transaction platform operators to bear certain obligations, as each online transaction platform operator shall establish an inspection and monitoring system for platform-based operators and commodity or service information released thereby; and where any commodity or service information in the platform violates laws, regulations or rules on market regulation, damages state interests and public interests, or goes against public order and good customs as identified, it shall take necessary disposal measures, keep relevant records, and inform the competent authorities.
If the platform operators punish the transaction operators by means such as a warning, suspension or termination for transaction operators’ violation of rules, the platform operators shall publicize such punishment and specify the transaction operators’ store name, misconduct, punishment, etc.
To ensure the fair competition among different platform operators, the Measures also forbids platform operators from unreasonably restricting transactions, transaction prices, transaction parties, etc. and interfering with transaction operators’ independent management. Unfair competition behaviors may include: 1) prohibiting or restricting transaction operators from carrying out business activities on multiple platforms under independent selection by means of search right reduction, removal of commodities, business restriction, store blocking or service charge increase, etc., or restricting them to carrying out business activities only on specific platforms by improper means; 2) prohibiting or restricting transaction operators from independently selecting express delivery and logistics as well as other transaction support service providers.
Conclusion
The Measures, incorporated with the characteristics of network transactions in the digital era, has detailed the obligations of various subjects of network transactions listed in the E-Commerce Law. From the perspective of enterprise compliance, e-commerce enterprises, including both platform operators and transaction operators, shall timely analyze whether their internal compliance system, transaction rules, user terms and other aspects conform to the provisions of the Measures and make corresponding adjustments if required.
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