New Rules for Online Mass Promotion of Goods and Services Take Effect in October

The State Administration for Industry and Commerce (SAIC) recently issued the Interim Rules for the Administration of Online Mass Promotion of Goods and Services. After 1 October 2015, e-commerce platforms will be penalised for not complying with these rules when conducting online mass promotion.

In the context of these Rules, online mass promotion refers to marketing campaigns with offers of preferential terms and conditions organised by operators of third-party trading platforms on the Internet for the sale of goods or provision of services within a given period of time.

These Rules clearly spelled out the obligations of third-party trading platforms. For example, third-party trading platforms are obligated to verify and keep a record of the identity of the selling entities, as well as record the content and time log of the information published on the trading platforms within the promotion period. The promotions by sellers must be scrutinised and tracked and measures must be promptly taken to stop violations once these are discovered. It is necessary to announce in advance the period, format and terms of the promotions. Fake transaction figures and user reviews will not be permitted.

For sellers doing business on these third-party trading platforms, the Rules clearly stipulated that they are required to make an advance announcement on the period, format and terms of mass promotions at a prominent place on the website. Advertisements of the promotions must contain truthful and accurate information. For promotions with strings attached, all the additional terms and conditions must be clearly and completely shown on the promotion webpage. Bad practices such as showing products that are at variance with the actual products and faking transaction figures are forbidden. Where reward points or discount coupons are offered, the methods and conditions of their use must be clearly indicated. Where prizes are offered, it is impermissible to fabricate the quantity and quality of the prizes or fake or manipulate the lucky draws.

On the use of gifts to lure consumers, the Rules pointed out that except for the normal sale of products, the gifts offered must comply with the stipulations of the Product Quality Law in quality and provide the "three warranties" (for repair, replace and refund).

For further information in Chinese, see Interim Rules for the Administration of Online Mass Promotion of Goods and Services.