China - Measures For The Supervision And Administration Of Online Transactions.

Legal News & Analysis - Asia Pacific - China - Regulatory & Compliance - Banking & Finance

16 June 2021

The State Administration for Market Regulation promulgated the Measures for the Supervision and Administration of Online Transactions (the “Measures”) on March 15, 2021 to refine certain provisions of the Electronic Commerce Law of the People’s Republic of China (the “E-commerce Law”).  The Measures are made up of 5 chapters and 56 articles in total, including the General Provisions, Online Trading Operators, Supervision and Administration, Legal Liability, Supplemental Provisions, and other provisions, and are highlighted below:

The Measures clarify issues in the registration of online transaction entities.  For the “public convenience services” and “low value transactions,” that the E-Commerce Law had exempted from registration, the Measures provide that individuals who engage in public convenience services such as cleaning, washing, sewing, hairdressing, moving, key making, plumbing, and repair and maintenance of furniture and household appliances through the Internet, which do not require a license under the law, or those who conduct online transactions with a cumulative turnover not in excess of RMB 100,000, are not required to be registered.

The Measures provide for the regulation of new modes of online transaction.  Internet service providers such as social networking operators and streaming platforms that provide online commercial space, product browsing, order generation, online payment and other online trading platform services shall fulfill their online trading platform operator obligations under law.  Operators who utilize the above services in their online transactions are required to comply with their obligations under law as platform-based business operators.

The Measures emphasize the protection of consumer rights and interests.  Under the Measures, operators shall not cause tie-in products to be included as the default option, nor shall they set the options used by the consumer in prior transactions as the consumer’s default options.  Operators who require automatic extension and automatic renewal payment shall remind the consumers in a conspicuous manner of such both before the consumers’ acceptance of the services and five days before the automatic extension and automatic renewal payment, so as to allow the consumers to make their own choice.

The Measures emphasize the protection of personal information by including a special provision on personal information protection, which requires online transaction operators who collect and use the personal information of consumers to follow the principles of legality, justification and necessity in their work, expressly indicate the purposes, manners and scope of the collection and use of personal information and obtain the consent of the consumers.  Online transaction operators shall not use general authorization, default authorization, tie-in authorization, refusal to install or otherwise force or effectively force the consumers to consent to the collection and use of information not directly related to the business activities.

The Measures further solidify the liability of the platform as an entity by including a series of provisions primarily covering the following requirements: (1) an online transaction platform operator shall verify and register the information submitted by the business operators on the platform and report and submit their identity information to the market supervision and administration authority twice a year; (2) an online transaction platform operator shall conspicuously indicate which operators are registered or not registered so that the consumers can identify them; (3) an online transaction platform operator shall set up an inspection and monitoring system over the business activities on the platform and handle and report relevant illegal activities in a timely manner; (4) an online transaction platform operator who issues warnings, suspensions, termination of services to operators on the platform shall publicly announce information on the measures taken in one working day from the date the decision on the measure is made; and (5) an online transaction platform operator is required to also provide information regarding the products or services of operators on the platform as well as the transactions made upon request of the market supervision and administration authority in the course of its regulatory illegal online transaction monitoring activities.

The Measures shall go into effect on May 1, 2021, and the original Administrative Measures for Online Transactions will be abolished.


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Joyce Wen, Lee Tsai & Partners

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