SPC Issues Juridical Interpretation on Online Consumer Disputes

With the vigorous development of the digital economy, China's online retail industry and live-streaming e-commerce market have expanded rapidly and online shopping has become a major consumption method in society. By December 2021, the total number of China's online shopping customers had reached to 842 million, while the total sales amount of online consumption in 2021 reached to RMB 13.1 trillion yuan. To better protect the rights and interests of consumers, on 15 February 2022, the Supreme People's Court (“SPC”) formulated the "The Provisions on Several Issues Concerning the Application of Law in Hearing Cases Involving Online Consumer Disputes" (I) (the “Provisions”), which mainly regulates online consumption contracts and civil liabilities in live-streaming marketing. We hereby introduce and interpret the key contents of the Provisions based on our view and experience.

I.    Invalid standard terms
PRC Civil Code has set out the general criteria for judging whether standard terms are invalid. Since online consumption contracts are mostly concluded in a virtual environment based on standard terms provided by e-commerce operators (i.e. sellers), the Provisions further clarify several commonly-seen scenarios that should be considered invalid. For example, considering that e-commerce operators have greater advantages and power in choosing and interpreting the contract terms, the "unilateral/final interpretation" right is an obvious imbalance of interests. Furthermore, since consumers are often unable to check the quality of the commodities in time and in detail when they sign the receipt, the clause “consumers shall not raise any quality problems after signing the receipt” should obviously be invalid.

The Provisions provides clearer guidance for e-commerce operators on how to identify invalid standard terms. To better comply with the Provisions, it is recommended that the e-commerce operators should conduct a timely review of the existing standard clauses to check whether there are any non-compliant standard terms. If so, it shall be rectified immediately.

II.    Civil Liabilities of platforms and operators

i. Civil liabilities of e-commerce platform operators
Article 4 of the Provisions reflects the management of “self-operated” platforms. Platforms such as JD.com, as the credibility endorsement of self-operated business, enable consumers to trust the quality of the self-operated commodities based on their trust in the platform. Therefore, it is reasonable to held e-commerce platform operators accountable when they sell products in a self-operated manner, or non-self-operated products but whose marks are enough to mislead consumers.

Whether the behavior of an e-commerce platform operator can be identified as self-operated usually takes into account the following factors: the "self-operated" information marked on the commodity sales page; the sales subject information marked on transaction vouchers, such as physical goods, invoices and other transaction documents.
 
ii. Civil liabilities of operators using the platform
There are lots of online stores transfers in practice. Limited by platform policies, transfers are often concluded by private agreements, without any due procedure to change the relevant operator registrations. This would lead to the case that the real seller of an online store is not the registered operator as the consumer knows it. The Provisions confirms that in such cases, consumers shall have right to claim both the registered operator and the actual seller to jointly bear the liability for compensation if consumers suffer any damages.

iii. Civil liabilities of live-streaming operators
When an operator sells its own commodities in its own live-streaming studio, if a staff member causes damage to consumers due to false propaganda during the live-streaming, the operator shall bear the corresponding responsibility. The "staff member" here could be understood as all the personnel who appear in the live-streaming studios, even if the personnel have no affiliation with the operator. 

When an operator sells commodities of other merchants in its live-streaming studio, it shall also bear the responsibility accordingly if it fails to indicate that it is not the actual seller in a way sufficient for consumers to identify. “Whether it is enough to be identified” usually be determined by comprehensively considering the performance of the transaction, agreement between the live-streaming operator and the seller, the cooperation mode, the transaction process and consumer perception, etc.
 
iv. Civil liabilities of live-streaming platforms
Four articles of the Provisions deal with the responsibilities of the live-streaming platforms. Article 13 stipulates that the live-streaming platforms shall bear the responsibility as the product seller when it sells commodities through its self-operated live-streaming studio. Article 14 clarifies the responsibility when the live-streaming platform fails to provide the real name, title, address and valid contact information of the live-streaming operator, it shall assume the first payment responsibility. Article 15 concerns food safety, and emphasis is placed on the qualification review obligations of the live-streaming platforms. The higher requirements are placed on the review obligations of live-streaming platforms for the behavior of selling food through live-streaming. Article 16 deals with the situation when the live-streaming platform knows or should have known that the commodities fail to meet the mandatory requirement for protecting personal and property safe, but still promotes the commodities, causing damages to consumers. 
 
Other articles of the Provisions clarify responsibilities for damages caused by takeaway catering, fictitious transaction, and free prizes or gifts provided by the e-commerce operator, and etc. The promulgation of this judicial interpretation has grasped the characteristics of online transactions, take reality as a guide, and will surely provide a higher degree of protection for online consumers.