Editor's note: The Beijing Internet Court (BIC) held a press conference to brief the public on the adjudication of cases related to false advertising in online consumption on March 13, prior to the World Consumer Rights Day which falls on March 15. At the conference, the BIC released eleven typical cases. Following are the details of cases 8-11.

Case 8

The promise of "tenfold compensation for counterfeit" constitutes a contract clause. Counterfeiters shall bear tenfold compensation for breach of contract

Case summary

The plaintiff, surnamed Liu, bought an auto part suspension arm from an online store operated by the defendant surnamed Yuan. The product description page featured the phrases "original factory parts" and "tenfold compensation for counterfeits". Upon receiving the product, Liu scanned the anti-counterfeiting QR code on the product, which showed "unknown source QR code". Liu also found multiple differences in steel stamp and marks when comparing the product with other parts he bought. Liu then sued Yuan at the BIC, requesting tenfold compensation from Yuan, as per the advertised promise. 

Details of the judgment

The court found that the title of the product sold by Yuan in the case included claims such as "original factory parts" and "tenfold compensation for counterfeits". But the anti-counterfeiting QR code was invalid. In the absence of evidence to prove the sales channel of the product, the court determined that the product sold was conterfeit. The promise of tenfold compensation for any counterfeit products appeared in the product advertising page should be regarded as a breach of contract liability on Yuan. Given that Yuan had engaged in selling counterfeit goods, Liu's request for tenfold compensation was well-grounded in law, and Yuan should make the compensation. 

Significance

The "tenfold compensation for counterfeits" promise, as a unilateral commitment made by business operators to an unspecified consumer group, holds heightened consumer trust, especially in fields that are highly professional and pose safety hazards such as auto parts. This case serves as a judicial example for regulating counterfeiting sales behavior of business operators in such fields. Business operators should abide by the principle of good faith and integrity, ensuring the authenticity of their product sources, while consumers are encouraged to make rational purchasing decisions based on their own conditions, both striving to foster a clean and orderly online consumption environment. 

Case 9

The jadeite bangle purchased via livestream did not match description - business operator commits fraud

Case summary

The plaintiff, surnamed Shi, purchased a jadeite bangle during a livestream operated by the defendant, surnamed Lyu. The livestream host, claiming to be a professional jewelry appraiser, introduced the piece as a "high-grade icy oil-green jadeite". Upon receiving the goods, the plaintiff believed that the actual item significantly differed from the advertised description. In response, Lyu argued that consumers were informed during the livestream of a 48-hour appreciation period, during which unconditional returns or exchanges were allowed. But after the appreciation period, returns or exchanges would no longer be accepted. There was no fraud during the process, Lyu claimed. The two parties failed to reach a settlement through negotiation and thus Shi filed a lawsuit with the BIC. 

Details of the judgment

The court held that, taking into account the livestream host's occupation as a professional jewelry appraiser, they should have professional knowledge on the quality of the jadeite. However, judicial appraisal found a significant discrepancy between the advertised and actual quality of the product. Moreover, the business operator failed to provide any evidence to substantiate the quality of the goods involved during the livestream. Therefore, it was established that the operator had engaged in false advertising which constituted fraud against the consumer. The court ordered the defendant Lyu to return the payment and compensate three times the amount, as well as to cover the appraisal fees. 

Significance

This case is conducive to regulating false advertising in livestream, particularly in cases where consumers’ legitimate rights and interests are infringed. In livestream sales, where the business operators are not in the same time and space as the consumers, which leads to an information gap. Business operators must present product information truthfully and with due diligence.  Operators should run their business with good faith and integrity, while consumers should consume with rationality, so as to jointly foster a healthy development of the new business mode of livestream sales. 

Case 10

Selling food that fails to meet safety standards and falsely claims medicinal properties—business operator held liable for tenfold compensation

Case summary

The plaintiff, surnamed Wu, purchased two units of "cordyceps and deer penis pills" with 2,632 yuan ($363.7) from an online store operated by defendant A, surnamed Xiao, on an e-commerce platform operated by defendant B, the company. The product details page claimed the pills had aphrodisiac effects and displayed information on its manufacturer (a bioengineering company), testing institution, 100 percent pure natural ingredients, along with the approval number and execution standard. However, Wu was unable to find any verifiable information about the manufacturer, approval number, or execution standard on relevant official government websites. Believing that the product was falsely advertised and non-compliant with food safety standards, Wu sued Xiao and the e-commerce platform at the BIC, demanding tenfold compensation for the cost of the goods.

Details of the judgment

According to the court's investigation, the product was edible according to its description. It had no drug production approval license thus  should be classified as general food product, subject to the regulation under China's Food Safety Law. The manufacturer and approval number displayed on the product page could not be verified through official channels, making it impossible to confirm the authenticity of the product's source and production information. Therefore the product was a food that did not meet food safety standards. 

Xiao as the seller of the product, failed to provide evidence including the actual manufacturer, the source of purchase and purchasing price, and certificate of conformity, thus failed to fulfill the obligation of inspecting the goods upon purchase as stipulated in the Food Safety Law. The court concluded that Xiao knowingly sold food products that did not meet food safety standards. The court eventually ruled that Xiao should compensate Wu ten times the payment for the product. 

Significance

As stipulated in the Food Safety Law, prepackaged food shall clearly display key information such as manufacturing address, contact information and manufacturing license number. Where food is produced in violation of safety standards, or sold despite the seller's knowledge of such violations, consumers are entitled to claim compensation of up to ten times the purchase price or three times the actual losses incurred.

This case is conducive to regulating business operations, where business operators should purchase goods through legal and official channels and strictly fulfill the obligation of inspection on incoming goods. The case also serves as a reminder for consumers to pay due attention to advertising information of the goods, especially key information regarding manufacturer, quality certificate and production certificate number.

Case 11

Food seller claiming therapeutic efforts for food products constitutes fraud

Case summary

The plaintiff, surnamed Zhang, purchased a box of ginseng ointment from a store at an e-commerce platform operated by the defendant company. The product details page claimed a long list therapeutic effects of the product including "resisting and controlling malignant tumors", "good for post-surgery recovery", "improving sleep quality, relieving fatigue, enhancing immunity, preventing occurrence of tumors, protecting the liver and kidneys, improving menstrual disorders, improving hyperuricemia, and prolonging life." It said that the product contained "important components of a first-class anti-cancer drug". The packaging of the product said it was a convenience food with ingredients of ginseng, red dates powder and pure water. Believing the product was false advertised, Zhang sued the company at the BIC, asking for termination of the contract, a refund of the goods and three times the price as compensation. The defendant argued that, although the ginseng ointment was food, it had medicinal value. 

Details of the judgment

The BIC held that the ginseng ointment was indeed a food product, but the efficacy advertised on its product details page were therapeutic effects on diseases, which constitutes false advertising. The court ruled that the defendant committed fraud and supported the plaintiff's requests.

Significance

China's Advertisement Law stipulated that, only advertisements for medical services, drugs and medical devices my reference disease treatment. All other ads must refrain from using medical terminology or language that could mislead consumers into confusing the product with drugs or medical devices. Additionally, the Food Safety Law stipulates that the content of advertisements for food must be truthful and lawful, and must not contain false information or involve functions of disease prevention and treatment. 

This case is conducive to regulating the product advertising of business operators, warning them not to make false, exaggerated or misleading promotions about their products that would deceive or mislead consumers. This case also reminds consumers to distinguish between medicines, foods and health foods.