Following our article of September 13th, last, we can confirm that the new PRC Law on Consumers’ Rights have been approved by the Standing Committee of the National People’s Congress on October 25th, 2013, and will enter in effect on March 15th, 2014.

The new law focuses on several issues on the relation between economic operators and consumers:

1) fairness and good faith

The main point is to allow consumers to make choices based on the right amount of pertinent information: for this reason, many provisions highlight that “in providing goods or services to the consumers, operators shall provide true and comprehensive information regarding the quality, performances, use, expiration date and other information” and that “such operators shall not release false or misleading advertising”, or that the “operators shall clearly label their products and services”.

2) online sales

It is now several years that China is experiencing an exponential increase of online sale of goods. Websites such as tobao, 360buy and others are providing goods at prices lower than the one available in physical shops. However, often it happens that goods received by the customers are not in compliance with descriptions posted in the online shop, or simply that the clients do not like what they have purchased and, because they have not been allowed to inspect the good before the actual purchase, they end up owning products that they will not actually use.

This new law is trying to regulate some aspects in this regards, such as the rights of return not only of defective goods, but also of goods that simply do not meet the favor of the consumer: in fact, from March 15, 2014, the clients shall have seven days of time to return to the seller the goods purchased on the phone or online without providing for an explaination but bearing the delivery costs in connection with the return. Some type of goods are excluded from such provisions: for instance, and for obvious reasons, perishable goods (such as food), press (magazine, newspapers, etc) or online games or gamed downloaded in the client’s electronic device cannot be returned to the sellers once purchased by the buyers.

Another issue in connection with the online sales was the protection of personal information provided by the consumers: now the law clearly states that not only the operators shall protect their clients’ confidential information (such as addresses, telephone numbers, bank details etc.) but also that they cannot disclose, sell or divulge in any manner whatsoever such information to third parties without the client’s consent. It is now a common practice that operatora are selling their customers’ personal information to other operators (such as, for example, banks, insurance companies, and other companies) that will use those information to promote their own products by, for example, calling the consumer or sending him/her short messages or emails. For sure those provisions will not cancel once and for all this annoying practice (very common in China, unfortunately!) but, we hope, it will at least reduce the episodes in which consumers are unwillingly contacted by sellers.

Another important point is connected to the online platforms that provide the online trading services: unlike before, the service providers shall know the relevant  information of the operators (such as real name, address, etc.) otherwise, in case of infringment by such operators, they will bear joint and several liability. Same consequence in case the service providers allowing operators to keep selling goods when they know that such goods are sold with false advertisements, or that such goods are harmful to the consumers. Those two provisions will allow the consumers to claim for damages not only to the operator, but also to the service providers of the online platform, thus increasing the consumer’s chance to actually obtain a compensation.

3) consequences for infringments

Finally, the amendments include provisions increasing the liability for operators that violates the law. With this new version, the operators (and in case of joint liability, the online trading platform service providers) shall be liable for paying consumers’ actual losses, costs, administrative sanctions and even punitive damages.

We believe that this new law is a definitive improvement from the ’94s version and will become, if properly enforced by the relevant authorities, a very useful instrument for safeguarding consumers rights.

2 Comments

Leave a reply