The Measures are enacted to regulate extensively China’s booming electronic commerce market, mainly based on the Law on the Protection of Consumer Rights updated on October 25, 2013, Product Quality Law, Anti-Unfair Competition Law, Contract Law, Trademark Law and Advertising Law.
The Measures focus on “online commodity trading” activities, defined as business activities that involve selling commodities and providing services thro ugh the internet (including mobile internet), and “related services”. These refer to profit-making services for online commodity trading, such as third-party trading platforms, promotion, credit evaluation, settlement, logistics, express delivery, network access, server hosting, virtual space rental, and website and webpage design and creation.
Operators of online commodity trading and related services (“Operators”) must be registered with the AIC and obtain a business license, which must be prominently displayed on the website on which Operators conduct their business activities.
Protection of online consumers’ rights
The Measures reiterate online consumers’ rights to return the commodity within seven days of receipt without giving a reason, as provided under the new Law on the Protection of Consumer Rights, in force since March 15, 2014. This right does not apply to (i) customized commodities; (ii) fresh and perishable commodities; (iii) audiovisual products downloaded online or unpackaged by consumers, computer software and other digital commodities; (iv) newspapers and journals that have been delivered; or (v) commodities that customers consider unsuitable for return due to their nature when purchased
The Measures emphasize Operators’ responsibility for personal data protection, and Operators are obliged to (i) seek consumers’ prior consent for collecting and using their personal data, (ii) keep the collected data confidential and secured, and (iii) take effective measures to remedy any leakage or loss of personal data.
Provisions on unfair competition
By implementing the provisions of PRC Anti-Unfair Competition Law, the Measures prohibit Operators from engaging in certain unfair practices, including the following:
- Using without authorization the domain name, name or logo of a well-known website, or creating a domain name, name or logo that is confusingly similar to that of a well-known website, which could mislead consumers;
- Using or forging without authorization the electronic logos of governmental departments or social organizations to spread misleading and false propaganda;
- Improving one’s own business reputation or another’s business reputation by creating fictitious transactions, deleting negative feedback or in any other way.
- Jeopardizing competitors' business reputations by making malicious assessments that contradict facts after completing a transaction.
- Carrying out illegal technical attacks against competitors’ websites or webpages, making it impossible for the competitors to operate normally.
Special provisions for operators of third-party trading platforms
Operators of third-party trading platforms (“Platform Operators”), such as Taobao, T- mall and Amazon, are online network systems that provide web space, virtual business premises, transaction rules, deal-making and information disclosure, to both parties of online commodity transactions.
The Measures establish that Platform Operators’ role is to oversee online trading activities, requiring them to carry out standard administration and supervision tasks on the Operators, such as authenticating Operators’ identification; notifying Operators of their rights, obligations and non-compliance liabilities; taking necessary measures to prevent Operators from violating the rules: establishing a dispute settlement system for online commodity trading; coordinating with the AIC to investigate illegal online business activities.