A well-known online travel agency operating in multiple jurisdictions was recently found guilty of price fraud and data abuse by a Chinese district court. As a result, the travel agency is liable to pay an individual customer punitive damages due to inappropriate price setting. The travel agency has been ordered to offer customers the use of its mobile app without having to accept its terms of service and privacy policy or to remove the content relating to the unnecessary collection and use of user information from such terms.(1)


The plaintiff was an established loyal customer and diamond-level registered user of the travel agency's app. This meant that she was eligible for a 15% discount on bookings made through the app. However, the customer found that the price she that had paid to book one hotel on the app was double the market listing price. The travel agency refused the customer's request for a full refund and argued that, as a platform, it should not be held responsible for the services ultimately delivered by the hotel. Therefore, on a contractual basis, the travel agency only partly refunded the difference between the customer's booking price and the market listing price.

Thereafter, a tort case arose in which the customer sued the travel agency for:

  • inappropriate price setting based on data abuse; and
  • the unnecessary collection of personal identification information.

The two issues were in breach of data regulations and the second issue was also in breach of the Law of Protection of Rights and Interests of Consumers, which would award the aggrieved consumer punitive damages if the court ruled in its favour.


The district court supported the plaintiff's argument and held the following:

  • The travel agency was liable for punitive damages (which equates to three times the normal award amount for an entitled consumer) for the price setting given that it had:
    • failed to display a real price for its consumers (misinformation);
    • been negligent in setting up an operation mechanism to ensure that the diamond-level discounts were benchmarked against the market price (pricing fraud); and
    • misinformed the customer of the reason that prevented it from providing a full refund (consumer fraud).
  • The travel agency was also liable for non-compliance with the doctrine of data collection to the extent of necessity under Chinese laws. Its terms of service and privacy policy at the time exposed personal identification information to undue risk by requiring customers' consent to:
    • the travel agency's automatic collection of users' personal information on, among other things, logs, devices and other software or apps installed;
    • the use of the aforementioned data for marketing and individualised recommendations;
    • further data analysis of users' bookings records for customer profiling; and
    • data sharing with the travel agency's affiliates and business partners. The travel agency even allowed its affiliates and business partners to use deep analysis and commercially utilise the personal identification information. The court also highlighted that, since the app was unusable for its basic functions if a customer refused to consent, the travel agency did not provide customers a choice, as is required by law.


Punitive damages for consumer fraud are increasingly being seen in China's courts. This case moves one step further because the court looked into the issue of data collection and abuse.

Many online businesses take it for granted that once they have the customer's consent, they are safe to use such data and even share it with third parties for commercial use. Based on the reasoning of this case, the doctrine of necessity and substitute services in cases of non-consent may be used by the courts in the future. It is time for companies to revisit the terms of service, privacy policy and even the data sharing and commercial use arrangements that they currently have in place.

For further information on this topic please contact Tim Yimin Liu or Sybil Xueting Yuan at Global Law Office by telephone (+86 21 2310 8288) or email ([email protected] or [email protected]). The Global Law Office website can be accessed at www.glo.com.cn.


(1) This is not a final judgment; the parties may appeal.