China’s laws have not kept pace with its rapidly evolving retail sector. A major overhaul of consumer protection legislation is set to take effect on March 15, 2014. In short the Revision basically changes everything for consumers in China. As always, only time will tell as to how it is implemented but the intent is clear – consumers will be given greater protection, writes Mark Schaub, lawyer at King&Wood and Malleson.
There any many reasons that reform was overdue as consumer privacy and safety have been routinely ignored by both Chinese regulators and multinational vendors. Main changes include:
Framework for E-commerce – China’s anti-Valentine day, November 11 2013 shattered all previous records with a whopping RMB 35 billion one day sales just for the Alibaba group. Curiously the law has not provided specific regulations for transactions made via internet, television, phone and mail. The major changes include: that consumers will have (subject to exceptions) a 7 day “no questions” asked return policy – crucially for vendors shipping expenses will be borne by the consumer; internet platforms will need to provide certain minimum information to consumers; and granting a right to consumers to seek compensation from either a vendor or the internet platform.
Privacy – Anyone bombarded unsolicited and unwelcome SMS, emails and phone calls will warmly welcome the new efforts to protect consumer personal information. In addition, business operators must first obtain a consumer’s consent and explain the intended use.
Increased penalties – the new legislation provides regulators and courts with a bigger stick to drive business operators towards compliance. Higher compensation for consumers; heavier fines for business operators; possibility for punitive damages; and even opens the door for public interest (i.e. class action) litigation.