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E-Commerce Platform Dispute Resolution and Legal Compliance Guide (Part I) — Contract Disputes Between Platform Operators and Merchants

E-Commerce Platform Dispute Resolution and Legal Compliance Guide (Part II) — Service Contract Disputes and Online Shopping Contract Disputes Between Platforms and Consumers

Part One

Tort Liability Arising from Product or Service Quality Issues

I. Main Legal Relationships

Where goods purchased by consumers on a platform do not meet quality or safety standards, causing personal injury to the consumer, the merchant bears direct liability. Pursuant to relevant laws, the platform shall only bear joint and several liability with the merchant if it knew or should have known that goods sold or services provided by platform merchants did not meet requirements for protecting personal and property safety, or if there were other acts infringing on consumers’ lawful rights and interests, and the platform failed to take necessary measures.

II. Types of Disputes

Generally, health rights disputes arising from online trading platform shopping.

III. Burden of Proof

1. Consumer’s Evidence

(1) Order details

(2) Seller’s subject information

(3) Platform’s subject information

(4) Materials evidencing damages suffered by the consumer (including but not limited to medical records, damage assessment documents, etc.)

2. Platform’s Evidence

(1) Business license of the merchant as publicly displayed on the platform

(2) If involving food or pharmaceutical products, the platform must also submit online food filing information, internet drug information service qualification certificates, and other relevant qualification information;

(3) Records of the platform’s timely removal of the relevant product.

IV. Key Dispute Issue

Whether the platform bears joint and several liability for consumer damages.

V. Legal Analysis

(1) For transactions not involving self-operated businesses, the platform is merely a transaction platform provider, providing platform services for merchants and consumers, and does not participate in transactions between merchants and consumers. Although Article 44 of the Consumer Rights Protection Law provides that if consumers cannot obtain the true name, address, and valid contact information of the seller or service provider from the platform, consumers may also claim compensation from the platform provider, the platform can use the merchant’s true name, address, and valid contact information as evidence to qualify for exemption.

(2) The platform bears fault liability for personal injury compensation. According to Article 38 of the Electronic Commerce Law of the People’s Republic of China, if a platform knows or should have known that goods sold or services provided by a merchant do not meet requirements for protecting personal and property safety, or if there are other acts infringing on consumers’ lawful rights and interests, and the platform fails to take necessary measures, it shall bear joint and several liability with the merchant. For goods or services related to consumers’ lives and health, if the platform fails to fulfill its review obligations for the merchant’s qualifications, or fails to fulfill its consumer safety protection obligations, causing consumer harm, it shall bear corresponding liability. From this legal provision, the platform bears liability only if it has corresponding faults. If consumers cannot prove the platform has faults and failed to take necessary measures, claims against the platform for compensation will not be supported by courts.

VI. Compliance Recommendations

(1) Distinguish self-operated from non-self-operated businesses. Different natures bear different legal liabilities. For self-operated businesses by the platform, the platform or the actual seller identified as self-operated bears direct liability for both product quality liability and consumer personal injury. Therefore, goods sold or stores on the platform must distinguish between self-operated and non-self-operated. Non-self-operated stores must display the true seller’s subject information. Therefore, for personal injury liability arising from non-self-operated goods or services, the platform bears only fault liability.

(2) Fulfill review obligations. According to Article 27 of the Electronic Commerce Law, it is clearly established that e-commerce platforms must verify and register merchants’ identity information, addresses, contact information, administrative licenses, and other true information; establish registration files; and conduct regular verification and updates. Therefore, when merchants join the platform, their information must be reviewed and registered. Special requirements must also be noted. For food and beverage merchants, their food operation licenses must be verified. For tobacco, alcohol, pharmaceuticals, etc., special permits and related certifications are required.

Part Two

Tort Liability Disputes Arising from Fraudulent Acts

I. Main Legal Relationships

Merchants shall, in accordance with Article 20 of the Consumer Rights Protection Law, provide consumers with true and comprehensive information about the quality, performance, uses, and validity period of goods or services, and shall not make false or misleading promotions; otherwise, they shall bear fraud compensation liability. The platform bears corresponding liability in fraud disputes only when it fails to fulfill platform obligations or when it knowingly participates.

II. Types of Disputes

Most consumers claim “refund plus triple compensation” (退一赔三).

III. Burden of Proof

1. Consumer’s Evidence

(1) Order for the purchase of the subject goods or services

(2) Merchant’s subject information

(3) Platform operator’s subject information

(4) Evidence of fraudulent acts such as false promotion and false activities

(5) Evidence that the product or service does not match the promotion, such as screenshots, screen recordings, notarized pages, etc.

(6) Evidence that the platform failed to fulfill its duty of care or knew or should have known

(7) Other materials evidencing fraud.

2. Platform’s Evidence

(1) Business license of the merchant as publicly displayed on the platform

(2) Transaction snapshots

(3) Evidence of having fulfilled the duty of care.

IV. Key Dispute Issue

Determination of fraudulent acts?

V. Legal Analysis

First, we must understand what “civil fraud” is. Civil fraud must satisfy the following four conditions: (1) subjective intent to defraud; (2) act of fraud; (3) erroneous understanding arising from the fraud; and (4) expression of will made due to the erroneous understanding.

Second, civil fraud liability? According to Article 55 of the Consumer Rights Protection Law, if a business operator provides goods or services with fraudulent acts, it shall, at the consumer’s request, increase compensation for losses suffered by the consumer. The increased compensation amount shall be three times the price of the goods purchased or the service fee paid by the consumer; if the increased compensation amount is less than 500 yuan, it shall be 500 yuan. Where laws provide otherwise, such provisions shall apply.

Finally, the platform’s legal liability? If the platform fulfilled its duty of care when merchants joined and publicly displayed merchants’ subject information on the platform, as the platform does not participate in transactions between consumers and merchants and is not a party to the purchase agreement, and since stores are independently operated and promoted by merchants with the platform not being the store’s operating entity, the platform should not bear civil liability for fraud.

VI. Compliance Recommendations

(1) Public disclosure of merchant subject information. The platform must not only review merchants’ qualifications when they join but also publicly display merchants’ business licenses in stores within the platform, allowing consumers to clearly understand the true operator of the store.

(2) Preserve transaction records. According to Article 31 of the Consumer Rights Protection Law, platform business operators shall record and preserve goods and service information and transaction information published on the platform, and ensure the completeness, confidentiality, and usability of such information. Goods and service information and transaction information shall be preserved for no less than three years from the date of transaction completion.

(3) Establish convenient and effective complaint and reporting systems. The platform should promptly verify and handle consumer complaints or reports and take necessary measures to prevent expansion of consumer losses. After investigation and verification, corresponding violations should be rectified, and non-compliant products or services should be removed.

Part Three

Tort Liability Disputes Arising from Infringement of Consumers’ Personal Information

I. Main Legal Relationships

Personal information protection has been a focus of attention in recent years. With the rapid development of network and information technology, in the internet era, personal information is collected in different ways at various places. The state, to strengthen personal information protection, has continuously clarified principles, rules, and legal liability for personal information protection in law. For platforms, to better operate and provide services, various types of information such as names, phone numbers, identification documents, and addresses may be collected. Therefore, platforms have the obligation to protect collected personal information and shall not arbitrarily disclose, use, or commit other infringing acts.

II. Types of Disputes

From cases publicly available on China Judgments Online, most are filed as tort liability claims involving infringement of privacy rights, reputation rights, portrait rights, etc.

III. Burden of Proof

1. Consumer’s Evidence

(1) Platform user account information

(2) Proof of personal information used by third parties (including but not limited to third-party notifications to users about platform orders, personal information changes, etc., via phone or text message.)

(3) Materials evidencing property losses and mental distress

In personal information infringement disputes, the current judicial environment mostly holds that plaintiffs complete their burden of proof if they can show that information that should only be known by the platform was leaked.

2. Platform’s Evidence

(1) Evidence of technical protection measures taken

(2) Materials fulfilling statutory security guarantee obligations

(3) Other necessary measures, etc.

IV. Key Dispute Issue

Personal information infringement disputes apply the fault principle. However, in judicial practice, if consumers provide initial evidence of infringing acts, courts will推定 (presume) the platform’s fault liability using the “high probability” standard. Therefore, the main dispute in personal information infringement disputes is whether the platform has fault.

V. Legal Analysis

In today’s internet era, there are大量 (a large number of) personal information protection issues in real life. Personal information leakage and unlawful use of personal information have become societal problems.

Disputes over platform infringement of citizens’ privacy rights are continuously occurring across various regions. Therefore, to avoid platform tort liability, platforms should improve their personal information protection systems and strengthen protection efforts.

VI. Compliance Recommendations

1. Lawfully and Reasonably Collect Personal Information

As platform operators, e-commerce platforms need to collect users’ personal information to provide services. However, personal information collection must follow lawful procedures. Users must not be defrauded, lured, or coerced into providing their personal information. Nor may personal information of others be obtained through unlawful channels. At the same time, collection should not infinitely expand the scope of personal information collected. E-commerce platform services should only collect personal information directly related to functions. Collection of blood type, fingerprints, disease information, etc., is prohibited. Phone numbers collected for registration, and recipient names, addresses, and phone numbers collected for physical delivery of goods in online transactions—all are collected to fulfill certain functions. According to the Ministry of Industry and Information Technology on March 3, 2021, several apps were required to be removed from shelves due to unlawful collection of personal information.

2. Strengthen Platform Confidentiality Obligations

First, e-commerce platforms must comply with confidentiality obligations for collected personal information as required by the Personal Information Protection Law of the People’s Republic of China.

Second, to avoid liability for personal information leakage, platforms are advised to strengthen confidentiality obligations regarding personal information processing: (1) Without user consent, personal information shall not be arbitrarily used or disclosed to third parties; (2) Improve confidentiality obligation content in platform privacy policies; (3) Establish technical encryption measures or firewalls; (4) Assign professional personnel for maintenance and establish supervision departments to oversee the protection and use of personal information.

3. Improve Consumer Authorization Rules for Use

E-commerce platforms should establish lawful, reasonable, and clear rules for authorization of personal information use. When consumers shop on platforms, they may choose to authorize others to use their personal information. For example, since physical delivery requires transportation companies to have access to personal addresses, the recipient’s consent is needed. Therefore, the system can allow users to choose the scope, method, and extent of information use.

4. Improve Consumer Deletion Rights Rules

Users shall have the right to dispose of their personal information, and requesting deletion of personal information from the platform is part of this disposal right. E-commerce platforms shall not restrict the period for users to request deletion. However, users must be informed. According to Article 14 of the Administrative Measures for Internet Information Services, “e-commerce platforms shall preserve consumer personal information backups for 60 days for inquiry purposes.” Therefore, data related to platforms’ data retention obligations may be deleted 60 days after a consumer requests deletion.

Part Four

Competent Courts for Tort Disputes

When tort disputes occur, they shall be under the jurisdiction of the people’s court where the tort occurred or where the defendant is domiciled.

However, attention should be paid to special provisions on the place of information network tort: According to Article 25 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China, “the place where the information network tort is committed includes the location of computers and other information equipment used to实施 (carry out/commit) the alleged tort; the place where the tort results occur includes the plaintiff’s domicile.” Therefore, courts where the platform is located or where consumers are domiciled can be chosen as the competent court for online trading tort cases.

Internet Courts’ Jurisdiction:

According to the Provisions of the Supreme People’s Court on Several Issues Concerning the Trial of Cases by Internet Courts (Fa Shi [2018] No. 16), the Beijing, Guangzhou, and Hangzhou Internet Courts have centralized jurisdiction over first-instance cases that should be accepted by intermediate people’s courts in their respective jurisdictions: (1) Disputes arising from the signing or performance of online shopping contracts through e-commerce platforms; (2) Online service contract disputes where signing and performance occur entirely on the internet; (4) Ownership disputes over copyrights or neighboring rights of works first published on the internet; (5) Copyright or neighboring rights infringement disputes over works that were first published or disseminated online; (7) Tort disputes over civil rights such as personal rights and property rights infringed on the internet; (8) Product liability disputes where products purchased through e-commerce platforms have defects and infringe on others’ personal or property rights.