The Gavel – Dec 2013 – Consumer Protection Law Revision


On 25th October, 2013, China’s top legislature passed a revision to the law on consumer rights and interests, the first since the legislation was adopted in 1993. The Amendment, takes effect on March 15, 2014 and adds provisions to respond to the recent boom in online shopping. Six amendments aim to improve the protection of consumer’s interests.

i) Shifted Burden of Proof
Imagine you purchase a regrigerator and after two months there is a problem with the cooling system. The vendor refuses to repair it free of charge accusing you of wrongful operation. In this case, the new amendment places the burden of proof on the vendor. This means they should prove their innocence if the consumer finds faults in durable goods such as TVs or washing machines within six months of purchase. Otherwise the vendor assumes relative responsibility.

ii) Improving Return of Goods
With the rise of the Internet, online shopping has become an important way of trading. According to data released by China Consumer’s Association, 20,454 complaints with regard to online shopping were received in 2012, accounting for 52.4 percent of the all complaints. The new law allows e-shoppers to unconditionally return goods in exchange for refunds within seven days of the transaction. They are however required to pay logistics costs.

iii) Privacy Protection
We have all had experiences of receiving spam after using our email address for online purchase. The leakage of personal information has seriously affected our daily lives and has intruded upon our privacy. The new amendment thus stipulates that all vendors must keep strict confidentiality of consumers’ personal information, adopt appropriate technical measures to safeguard this information and, furthermore, should not send commercial information to consumers without their explicit consent and request.

iv) Public Interest Litigation
Where a business operator harms the legitimate interests of a large number of consumers, China Consumer’s Association is now able to bring a lawsuit to better protect public interest, since a single consumer may be too weak to fight for their rights against a powerful corporation or may not have the resources to organize group litigation.

v) Online Trade Liability
Online shopping is not equal to ordinary purchasing. Generally speaking, it is difficult to identify online vendors’ sales qualification or business reputation. Thus, the new amendment partly attributes accountablity to the online trading platform. The platform will be liable for compensation if it is unable to provide the true name, address and valid contact method of the seller. This means if you purchased a fake watch from a platform such as Taobao, you may have the right to ask Taobao to compensate you for your loss if they cannot provide any valid information of the watch seller.

vi) Sales Fraud Compensation
Compared to the original version of the law, the amendment has imposed harsher penalties on business operators, who defraud consumers. Additional compensation for commercial fraud can now be three times the value of goods or services, with a minimum fine of ¥500.

Imagine buying a sack of rice at a discount of 50 percent from a supermarket. However after you arrive home you find that you were wrongfully charged the full price of ¥40. In this case you will be entitled to ask the supermarket for compensation at three times the amount you paid for the goods. Since there is a minimum fine of ¥500, you would get ¥500 Yuan in compensation.