Opinions on Improving the Systems of First Approach and Advance Compensation Payment of Business Operators of the Consumption Stage to Duly Protect the Lawful Rights and Interests of Consumers

I. Improvement of the First Approach System of Business Operators of the Consumption Stage, and Procuring the Due Performance by Business Operators of the Responsibilities of the First Party Responsible for Protecting Consumer Rights

(1) Business operators of the consumption stage shall perform in accordance with the law the responsibility of the first party responsible for protecting consumer rights and, based on the principle of “who sells the goods is responsible, and who provides the service is responsible”, shall accept in a timely manner and deal with in accordance with the law consumer complaints and actively settle consumer disputes.

The term “first approach system of business operators of the consumption stage” means that, when the purchase or use of a good or the acceptance of a service by a consumer results in his/her lawful rights and interests being prejudiced, he/she may approach the seller or service provider to protect his/her rights, and the business operator must bear the first approach responsibilities in accordance with the law and may not attempt to pass the same onto another.

(2) If the purchase of a good or the acceptance of a service through an online trading platform results in the lawful rights and interests of a consumer being prejudiced, he/she may demand compensation directly from the seller or service provider. If the business operator of the online trading platform is unable to provide the true name, address and valid contact information of the seller or service provider, the consumer may demand compensation from the business operator of the online trading platform. If the business operator of the online trading platform has given an undertaking that is more favourable to consumers, it shall perform such undertaking. Once the online trading platform has paid compensation, it may recover the same from the seller or service provider in accordance with the law.

(3) If the purchase of a good or the acceptance of a service at a trade fair or leased booth results in the lawful rights and interests of a consumer being prejudiced, he/she may demand compensation directly from the seller or service provider. After the end of the trade fair or expiration of the lease of the booth, the consumer may demand compensation from the organiser of the trade fair or the lessor of the booth. Once the organiser of the trade fair or the lessor of the booth has paid compensation, it may recover the same from the seller or service provider in accordance with the law.

(4) If a consumer or other injured party incurs personal injury or a property loss due to a defect in a good, he/she may demand compensation from the seller or, alternatively, from the producer. If the consumer demands compensation from the seller, the seller may not attempt to pass the responsibility onto another. Once the seller has paid the compensation, it may recover the same from the producer in accordance with the law.

(5) A business operator may not attempt to shift the reasonable requests of a consumer to protect his/her rights and interests onto another, deliberately delay handling the same or refuse such requests without cause. Where, of their own free will, both the consumer and the business operator wish to settle, the business operator shall perform the settlement agreement in a timely manner. If the parties fail to reach a settlement, and the consumer further lodges a complaint with the relevant administrative department or a consumer protection organisation, the business operator shall actively cooperate in the investigation and handling thereof.

(6) Business operators, such as sellers and service providers, shall establish and improve a system for consumer dispute settlement and consumer right infringement compensation, establish a dedicated department or designate persons specifically charged with handling consumer complaints, and shall post in a conspicuous location in its place of business, or make public by other means that facilitate awareness by consumers, its relevant procedures for handling consumer disputes.

II. Encouraging and Guiding Business Operators of the Consumption Stage to/in Establish(ing) a System for the Advance Payment of Compensation so as to Enhance Efficiency in Resolving Consumer Disputes

(7) Operators of malls and supermarkets that lease booths or premises, in particular, large furniture, construction material, household appliance and other such malls of significant size (Malls), markets with a relatively large number of stalls and wholesale markets (Markets), online trading platforms and television shopping platforms (Platforms), etc. that provide operating conditions and related services to sellers and service providers shall be encouraged to, and guided in, establish(ing) and improve(ing) a system for the advance payment of compensation.

The term “system of advance payment of compensation at the consumption stage” means a system wherein a Mall, Market or Platform operator and the sellers or service providers on the premises execute, on the basis of free will, an agreement (terms) on advance payment of compensation for consumer complaints, and in the event that an infringement of the lawful rights and interests of a consumer arises where the seller or service provider deliberately delays handling thereof or refuses to pay compensation without cause, or where the seller or service provider has vacated the premises or in other such circumstances, making it impossible for the consumer to obtain compensation, the Mall, Market or Platform operator first pays the compensation to the consumer. After first paying the compensation to the consumer, the Mall, Market or Platform operator may recover the same from the seller or service provider in accordance with the law or the agreement.

(8) A Mall, Market or Platform operator that has established a system for the advance payment of compensation shall specify the conditions and process for, and the method of, initiating the advance payment of compensation, and the scope thereof, improve the procedure for the advance payment of compensation, announce the same to all the consumers and to the sellers and service providers in the Mall, Market or Platform and subject itself to public scrutiny.

1. A system for initiating the advance payment of compensation shall satisfy the following basic conditions: (i) the consumer provides an invoice or other such proof of purchase or service; (ii) except in circumstances where the burden of proof is reversed as specified in the third paragraph of Article 23 of the Law on the Protection of the Rights and Interests of Consumers applies, the consumer provides evidence that his/her lawful rights and interests have been prejudiced; (iii) the limitation of actions for the consumer to request protection of his/her own lawful rights and interests complies with relevant provisions of Article 24 of the Law on the Protection of the Rights and Interests of Consumers; and (iv) the consumer has been unable to obtain compensation due to such a reason as the seller or service provider that is liable for compensation has deliberately delayed, refused without cause or has vacated the premises.

2. The general procedure for a system for the advance payment of compensation is as follows: (i) where a consumer deems that his/her own lawful rights and interests have been prejudiced, he/she may seek compensation directly from the seller or service provider; if the consumer is dissatisfied with the manner in which the seller or service provider handled the matter, he/she may lodge a complaint with the Mall, Market or Platform operator; (ii) once it has received the complaint, the Mall, Market or Platform operator should, in a timely manner, arrange for persons dedicated to deal with it and arrange for the seller or service provider and the consumer to hold consultations; (iii) if a consensus is reached through the consultations, the Mall, Market or Platform operator procures the timely performance of the agreement by the seller or service provider; (iv) if the consultations are unsuccessful, and it is ascertained that the seller or service provider against whom the consumer filed the complaint was indeed at fault, the Mall, Market or Platform operator proceeds to pay the compensation to the consumer in advance in accordance with its established system for the advance payment of compensation.

3. The methods of advance payment of compensation mainly include repair, remaking, replacement or return of the goods, making up the shortfall in the quantity of goods, refunding the amount paid for the goods or service, and compensation for losses.

4. The scope of advance payment of compensation mainly includes loss in the value of the goods or service arising due to problems in their/its quality; the liquidated damages specified in the consumption contract; losses incurred by the consumer due to after-sale, installation or other such problems.

(9) A Mall, Market or Platform operator may, on the basis of consultations with the sellers and service providers on the premises conducted on the basis of equality, implement management of the qualifications and trustworthiness of the operations on the premises. Namely, when entering into a contract (agreement) with a seller or service provider on the premises, setting forth clauses on the protection of the rights and interests of consumers, and using means such as terminating the operating qualifications, through termination of the contract, refusing to renew the contract, etc., of a seller or service provider that has had multiple complaints lodged against it by consumers but refuses to rectify the matter or on several occasions has been found to have infringed the lawful rights and interests of consumers, so as to regulate the business acts of sellers and service providers and create a business environment characterised by good faith.

(10) Mall, Market and Platform operators shall be encouraged to, and guided in, actively establish(ing) “consumer rights protection service counters” based on the features of their operations, announce(ing) the means for accepting consumer complaints and accept(ing) and handle(ing) consumer complaints in a timely manner by means such as complaint service hotlines, the internet and mobile communications.

If a consumer seeks to protect his/her own rights and interests through other statutory channels, the Mall, Market or Platform operator shall, as requested by the consumer, provide relevant information such as the genuine registration information and transaction information of the relevant seller or service provider in a timely manner and actively assist the consumer in protecting his/her own lawful rights and interests.

III. Vigorously Promoting the Development of 12315 “Five Access”¹, and Solidly Implementing the Systems of First Approach and Advance Compensation Payment of Business Operators

(11) Improving the systems of first approach and advance compensation payment of business operators of the consumption stage is an important task imposed upon administrations for industry and commerce by document Guo Fa [2014] No.20 and an important measure in constructing a new mechanism for the protection of consumer rights with synergic efforts and fostering a safe and worry-free consumption environment. From the expectation of improving the market oversight system, safeguarding the market order and protecting the lawful rights and interests of consumers, all local administrations for industry and commerce and market regulatory departments shall take genuinely effective measures to promote the implementation of the systems of first approach and advance compensation payment of business operators.

(12) All local administrations for industry and commerce and market regulatory departments shall treat vigorous promotion of the development of 12315 “Five Access” as a key stepping stone in improving the systems of first approach and advance compensation payment of business operators, actively promote the establishment of “consumer rights protection service counters” by Mall, Market and Platform operators, procure the genuine performance of their social responsibility of protecting consumer rights by accepting and handling consumer complaints in a timely manner. Based on the different features of business entities and while comprehensively considering the differences in regions, industries and scale of operations, they shall strengthen guidance by type, procure the genuine performance by business operators of their first approach responsibilities, encourage and guide qualified Mall, Market and Platform operators to/in establish(ing) systems of advance payment of compensation and enhance(ing) efficiency in the handling of consumer disputes.

(13) All local administrations for industry and commerce and market regulatory departments shall establish and improve routine communication mechanisms with the “consumer rights protection service counters” in their jurisdictions so as to circulate information on the handling of consumer complaints in a timely manner, and strengthen the vocational training of the working personnel of “consumer rights protection service counters” so as to enhance their capabilities in handling consumer disputes. Where a consumer complaint is transferred by way of the “green channel” (rights protection express service) for settlement and handling by the business operator against whom the complaint was filed, follow-up monitoring and management of the handling outcome shall be carried out. With respect to business operators that are the target of a relatively large number of complaints or that are ineffective in handling consumer disputes, efforts shall be made to procure rectification through means such as administrative talks and the issuance of written recommendations. The establishment of a “complaint to case” mechanism shall be actively promoted and business operators that refuse to perform their first approach responsibilities shall be dealt with in accordance with laws, regulations and rules such as the Law on the Protection of the Rights and Interests of Consumers, the Product Quality Law and the Measures for Punishing Infringements of the Rights and Interests of Consumers (Order of the SAIC No.73). Where a business operator is subjected to penalties by an industry and commerce or market regulatory department due to its failure to perform its first approach responsibilities, information on such penalties shall be made known to the public via the system for the publication of enterprise integrity information in a timely manner.

(14) All local administrations for industry and commerce and market regulatory departments shall vigorously publicise consumer rights protection policies and regulations, and strengthen their education and guidance of business operators. With respect to business operators that positively deal with consumer disputes and have good results in establishing a system for the advance payment of compensation, all local administrations for industry and commerce and market regulatory departments shall proliferate the role model effect and, in concert with relevant government departments, industry associations, the news media, etc., publicise and commend them. Qualified regions may explore linking the implementation of the systems of first approach and advance compensation payment of business operators, on the one hand, with activities such as “creation of worry-free consumption activities” and “establishment of a star-rated integrity market”, on the other hand, and guide business operators in taking part therein so as to create a safe and worry-free consumption environment and better protect the lawful rights and interests of consumers.

Translator's note:

1. It is related to the consumer complaint hotline established by the State Administration for Industry and Commerce and the furthering of this consumer complaint work to shopping malls, supermarkets, markets, enterprises and scenic regions.