The Enforcement Rules for the Law of the People’s Republic of China on Protection of Consumer Rights and Interests (Draft for Soliciting Opinions) (Mainland China)

James Cheng
On August 5, 2016, the State Administration for Industry and Commerce promulgated the draft for soliciting opinions for the Enforcement Rules for the Law on Protection of Consumer Rights and Interests (the “Rules”) to solicit opinions from the public from August 5, 2016 through September 5, 2016. The Rules further enhance the protection of consumer rights and interests, stipulate in further detail the business operators’ responsibilities and contain further operationally-based provisions addressing issues in the protection of consumer rights and interests in emerging consumption domains.
Consisting of eight chapters and a total of 70 articles, the Rules appear overall different from the other enforcement rules and do not follow the structure of the law that it relates to, i.e. the Law on Protection of Consumer Rights and Interests (the “Law”). Instead, the Rules make a departure from the regulatory angle of the Law so that the two may better complement each other and enhance the protection of consumer rights and interests.
First, the Rules set out additional details with respect to the general consumer rights and the business operator’s responsibilities under the Law, such as personal property protection at place of business, recall of defective products, substantiation of the quality issues in defective products, performance of replacements and repairs, restrictions on 7-day unconditional returns, contents of standard clauses and definition of fraudulent acts to consumers so that the Law may better cover important aspects of the daily lives of consumers. In particular, the Rules contain special provisions concerning the replacement and repair of durable goods, decorations and retrofits, as well as goods or services that do not meet quality requirements. For example, if a dispute arises as a result of defects found in the aforementioned products within six months after the sales agreement has entered into effect, the business operator shall have the burden to substantiate that such defect is not attributable to the quality of its goods or services; otherwise, the business operator shall be obliged to handle returns, replacements and repairs. For a business operator whose goods or services do not meet quality requirements, as long as there is evidence demonstrating that it is still obliged to handle returns/replacements/repairs at the relevant time, it must assume such obligations even if there is no invoice or return receipts. The Rules also provide that the business operator’s warranty for replaced or repaired goods restarts at the time of the replacement and may not be shorter than the quality assurance period or the usage life of such goods.
Chapter III of the Rules covers the obligations of businesses in public utility, transportation, financial services, decoration and retrofits, courier services, food and beverage, property, cosmetics, maintenance and repair, training, intermediaries and business franchises, as well as those providing services through special means such as prepaid cards. Their legal liabilities are covered in Chapter VII. Taking the protection of consumers of financial products as an example, as the wealth of the general public continues to rise, the consumers’ relationship with financial institutions is becoming closer and closer, yet the protection of the consumers’ interests and rights has been ignored by all parties. The Rules set out to include the purchase, use or acceptance of financial products or services by consumers for profit purposes is now included under the protection of the Law and specifically provide that the rights such as the right to the security of property, the right to know, the right to choose, the right to engage in fair trade, and the right to claim damages should be protected. Financial service providers may not conceal risks, exaggerate returns, provide to consumers misleading or confusing information about their own financial products or the financial products that they distribute for others, or arbitrarily and unilaterally increase fees or fee standards.
The Rules also enhanced the administrative protection of consumer rights and interests by incorporating information on administrative penalties imposed on unlawful business operators over their infringement of consumer rights and interests into the soon-to-be-established records of loss of credibility of business operators due to their violations of the law. The records will be disclosed to the public through “Credit China” and the National Enterprise Credit Information Disclosure System so that businesses are toeing the line in assuming their responsibility to protect the lawful rights and interests of consumers.
The Rules will address the industry sectors and enforcement issues that are not currently adequately covered in the current version of the Law, and they will also contain specific provisions addressing the hot topics and challenging issues in the general consumption of the public, thereby greatly facilitating the ways in which consumer rights and interests may be maintained.