China to Enhance Consumer Rights Protection

By Yao Lu, Dezan Shira & Associates

Posted: 16th May 2013 08:45

China’s Consumer Protection Law, which was promulgated in 1993 came into effect in 1994, has contributed greatly to the protection of consumer rights in the past two decades. However, since the country’s consumption patterns and structures have undergone significant changes in the years since the law’s original release, some provisions of the current Consumer Protection Law have fallen behind the times, and are therefore hindering the development of China’s consumer market.
 
In response, China’s National People’s Congress released the “Draft Amendment to the Consumer Protection Law (hereinafter referred to as the ‘Draft’)” on April 28, which is the first revision to the country’s Consumer Protection Law. The Draft aims to further protect consumer rights and boost domestic demand in the country, and has made revisions to the current law in the following five areas:
 
 
Enhancing rules concerning consumer rights protection
 
Better protection of personal information
According to the Draft, collecting and processing of personal information must be for specific, clear and reasonable purposes, and the collection of such information should be subject to the permission of the individual who has been well-informed. Moreover, the Draft states that the personal information of consumers is strictly confidential and business operators shall adopt technical measures and other necessary measures to ensure the security of such information.
The Draft also provides that business operators are not allowed to send digital commercial information to consumers who have explicitly refused to receive such information or who have not agreed to receive such information.
 
Harsher punishments for commercial fraud
The Draft imposes harsher penalties on business operators who defraud consumers, and additional compensation for commercial fraud could be equivalent to twice the value of goods or services, with a minimum fine of RMB500. Moreover, criminal liabilities will be investigated in cases where defective products have damaged people’s health or have resulted in death.
 
Strengthening the obligations and duties of business operators
 
Duty to recall defective products
According to the Draft, business operators who have discovered their products are defective and could cause harm to people’s health or property shall immediately suspend the production and sales of such products and, at the same time, issue a warning and recall the products.
 
Burden of proof on business operators
To alleviate pressures on consumers, the Draft imposes the burden of proof on business operators in the case of a legal dispute, stipulating that “with regard to the durable goods, such as vehicles, micro-computers, televisions and refrigerators, the business operator shall bear the burden of proof if defects are found within six months since the purchase date of such products.
 
Responsibility of advertisers and marketers
The Draft increases the responsibility of advertisers and marketers, saying that those who design, create and release deceptive advertisements concerning food and drugs and other goods related to consumers’ health, are subject to joint liability with the producers or the business operators.
 
Regulating the e-commerce industry
 
The current Consumer Protection Law has no rules regulating online shopping. In order to close such loopholes, the Draft provides that for goods sold via the Internet, television, telephone, or mail order, consumers have the right to return the goods within seven days from the date of receipt of the goods, and the amount paid by consumers shall be paid back within seven days upon the receipt of the returned goods by the seller.
 
The Draft also requires online sellers to provide authentic and complete details relating to their products and/or services to online shoppers. Moreover, online shoppers can demand compensation from the e-trade platform if the seller has stopped using the platform, and the platform can then claim compensation from the seller after compensation has been paid out to online shoppers.
 
Clarifying the role of consumer associations
 
The Draft requires consumer associations to provide consumption information and consultation services to consumers and participate in the legislation of laws, regulations and relevant standards concerning consumer rights and interests. Moreover, such organizations may file actions in cases where the rights of a large group of consumers have been infringed upon.
 
Clarifying the regulatory responsibilities of administrative authorities
 
The relevant administrative departments shall handle complaints filed by consumers within seven days after they receive the Letter of Complaint, and moreover, they shall strengthen administrative punishments concerning acts that infringe upon the legitimate interests and rights of consumers.
 
The Draft is currently seeking public opinions and comments, and such feedback can be submitted via the following methods through May 31, 2013.
   
This article was first published on China Briefing.
 
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
 
For further details or to contact the firm, please email info@dezshira.comor visit www.dezshira.com.

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