Implementing Rules of Consumer Protection Law released

Against this background, to improve the legal protection for consumers, the Implementing Rules for the Law of the People’s Republic of China on Protection of Rights and Interests of Consumers (“Implementing Rules”) were released by the State Council on March 15, 2024 and will come into effect on July 1, 2024.

The Implementing Rules provide more detailed rules for recall of defective products. In case of recalls of commodities, the manufacturer or importer of the commodities shall develop a recall plan, release recall information, inform the consumers about their rights and undertake all necessary fees of the consumers due to the recall of the commodities. Relevant operators engaging in sale, lease, repair, manufacturing and supply of parts and components and commissioned manufacturers shall perform relevant assistance and cooperation obligations pursuant to the law.

In traditional or online sales, the operators are found to frequently provide false information about the operators themselves or their products and services. Under the Implementing Rules, the information obligations of the operators are more specified. The operators undertake the obligations to provide true and comprehensive information on goods or services in a straightforward way. False or misleading statements to the public are prohibited, such as:

Especially in online sales, new customers are often granted discounted prices. Sellers sometimes offer existing customers discriminating higher prices. The Implementing Rules explicitly prohibit operators from setting different prices / charging criteria for the same goods or services under the same transaction conditions without knowledge of the consumers.

For a clear pricing information, the operators must indicate the following in a conspicuous manner: name, price and pricing unit of goods or items, content, and pricing method, and other information. Price tag and price items must be complete, the content true and accurate, and the marks clear and eye-catching.

In the past, the membership fees are often charged automatically without prior notice or reminder to the consumers. When the consumers receive the corresponding membership fee deduction notices, it is too late for the consumers to make a choice as the automatic extension or renewal is already done and the membership fee has been paid. According to the Implementing Rules, the operators are obliged draw the attention of consumers to the automatic extension or renewal in a prominent way before consumers' acceptance of services and the date of automatic extension or automatic renewal.

The Implementing Rules emphasize the operators’ obligation to clearly state the real names and markings.

For traditional retail business, the retailer must display real name and markings at its premises. Online retailers must indicate the real name and marking in a prominent manner on its home page, video frame, voice, catalogue of goods, etc. For retail in leased counters or premises, the operators must also indicate the real name and markings in a prominent manner.

In addition to the general rules contained e.g., in China’s Civil Code, operators shall not use standard clauses to

For the currently most popular retain channel of livestreaming sales, the Implementing Rules also set a clear standard. A live-streaming marketing platform operator has the obligation to establish sound consumer right protection systems. One must distinguish the platform operator from the live-streaming booth operator which supplies certain products or services under its enterprise name, and from the live-streaming marketer who is an individual like an employee, key opinion leader or a celebrity featuring in the live-streaming event. Upon the request of the consumer in case of disputes, the platform operator shall provide information on the live-streaming booth operator and live-streaming marketer, records of the relevant business activities and other necessary information.

The live-streaming booth operator or live-streaming marketer must also undertake the obligations under the Advertisement Law as long as such live-streaming content constitutes a commercial advertisement.

 

For sales over the Internet, television, telephone, mail order, etc., operators must mark goods in a prominent manner for which a free return is not applicable, and must remind consumers to confirm this at the time of purchase. Without confirmation by consumers, operators shall not refuse a free return.

To avoid misuse of the free return clauses, the consumers are on the other hand expressly prohibited to damage the legitimate rights and interests of operators and other consumers by taking advantage of the rules on free return.

The Implementing Rules stipulate that the operators shall agree with the consumers in advance on the method, procedure, and time limit for refunding deposits. The law prohibits unreasonable conditions for refunding the deposits. Further, the operators shall promptly refund the deposits of a consumer if the conditions for refunding the deposits are satisfied.

For advance payments, the operators shall conclude a written contract with consumers, stipulating the specific contents of the goods or services, price or fees, method for refunding the advance payment, liability for breach of contract, etc. Operators shall cease to collect advance payments if they encounter any major business risk, which may affect their normal provision of goods or services in accordance with contractual agreements or transaction practices.

In additional to the Personal Information Protection Law (PIPL) as well as other applicable data protection laws and regulations, the Implementing Rules expressly prohibit operators from excessively collecting personal information of consumers or compelling the consumers to consent to the collection and use of personal information by means of one-off general authorizations, or default authorizations.

The processing of sensitive personal information such as biometric identification, religious belief, specific identity, medical health, financial account, location and tracking of consumers as well as the personal information of minors under the age of 14 requires prior separate consent of the individuals according to PIPL as well as other related laws and regulations. 

Operator may not send commercial information or make commercial phone calls to the consumer without consent of such consumer. Where a consumer agrees to receive commercial information or commercial phone calls, the operator shall provide a clear and convenient method for cancellation or opting out.

Consumers can make complaints to the competent market regulation administration or other related authorities which shall unblock and regulate channels for consumer complaints and whistleblowing, improve the procedures for handling complaints and whistleblowing. The authorities must promptly accept and handle complaints and whistleblowing.

For settlement of consumer disputes, the operators shall establish a convenient and efficient complaint handling mechanism to resolve consumer disputes in a timely manner. The law encourages and guides the operators to establish and improve towards a guaranteed satisfactory resolution, advance compensation, online dispute resolution and other systems to prevent and resolve consumer disputes in a timely manner.

Within seven working days from the date of receipt of a complaint, the relevant administrative authorities shall manage it and inform the consumer of the result. After accepting a complaint, the relevant administrative authorities shall promptly mediate ex officio and complete mediation within 60 days from the date of acceptance, as long as the consumer and the operator agree on mediation.

Upon consent of the consumer and the operator, the relevant administrative authorities may also entrust a consumer association or any other mediation organization for mediation of complaints.

The Implementing Rules are essential for enterprises, in particular those engaged in retail, e-commerce in industries like food, beverage, home furnishing, clothing, fashion, or other form of B2C businesses. We suggest the concerned enterprises to take proactive measures to review and adapt their current platform rules, general terms and conditions as well as other related rules to meet the updated legal requirements under the Implementing Rules prior to July 1, 2024.