The Electronic Commerce Law of the People’s Republic of China (Draft) will be submitted to the NPC Standing Committee this week for its first review. The draft covers e-commerce operating entities, transactions and services, transaction security, cross-border e-commerce, supervision, administration and legal responsibilities.

Main Body:

     The draft is composed of general terms, provisions governing e-commerce operating entities; transactions and services; transaction security; cross-border e-commerce, supervision and administration; legal responsibilities and supplementary provisions.

Definition of E-Commerce:

     E-commerce is defined as “business activities involving commodity or service transactions over the Internet or other information networks. Information networks can include Internet and/or mobile Internet”. The term “commodity transaction” refers to both tangible and intangible product transactions (digital products, for example); The term “service transaction” refers to transactions involving service products. The term “business activity” refers to commercial activities aimed at making profit such as commodities transactions, service transactions and related business support activities.”

Scope:

   The Electronic Commerce Law covers the operation of e-commerce operating entities, business behavior, contracts, express logistics, electronic payment and typical issues arising from the development of e-commerce. The law does not apply to transactions involving financial products and services or to content services for streaming audio or video programs sent through information networks or Internet publishing.

Key Issues

　1. Prohibited behaviors that distort the evaluation of e-commerce business information.

　Prohibited behaviors include fictitious transactions; deletion of negative comments; acquisition of positive comments through the payment of money or other benefits to improve one’s own or another party’s business reputation; malicious untruthful negative comments that impair another party’s business reputation; harassment or threats designed to force someone to make, alter or delete a comment on a commodity or service against his/her will; manipulation or selective disclosure of credit rating records; and the release of false credit rating information.

　2. Prohibited behaviors of unfair competition

　No party that engages in e-commerce business activities may, without authorization, use business marks that are identical or similar to well-known business marks, including the main portion of another party’s domain name, webpage name or webpage in a manner that misleads the public and causes market confusion. No operator may use a service agreement or any other means to restrict transactions, charge excessive fees or impose any other unreasonable conditions on a transaction. No operator may attack or intrude upon the network system of another operator or maliciously access, intercept or manipulate the online shop of another operator to negatively impact its normal business activities.

　3. Determination of logistics fees and compensation obligations

   E-commerce operating entities are not allowed to charge consumers special fees for express logistics services that are higher than the service price that the express logistic provider makes available to the public; and such an operating entity is not allowed to exploit its operational advantages by limiting the consumer’s choice of express logistic providers. The express logistics provider must compensate for any delay, loss, damage or shortage that occurs in an e-commerce transaction during its course of service.

　4. Obligations to third party e-commerce platforms

　The Draft regulates third-party platforms in four ways: (i) a formal examination will be conducted on e-commerce operators to assess their ability to provide safe and stable services; (2) platform transaction rules must be developed in an open and transparent way; (3) the Draft includes requirements on the publication of important information and the storage of transaction records; (4) withdrawal requirements apply.

    A third-party e-commerce platform must record and retain the commodity and service information published on the platform as well as its transactional information. It must also ensure the truthfulness, completeness and accuracy of such information. Commodity, services and transactional information should be retained for at least three years after the transaction’s completion date.

       5. Protection of personal information

　An e-commerce operating entity that collects personal information from mobile users is obligated to clearly explain to users the rules of information collection, treatment and use and obtain user consent to such activities. Once the information retention period (as required by law or otherwise agreed) expires, the operating entity must delete the information with no further use of it and destroy related personal information on its own initiative or at the user’s request.

Reference: Draft Electronic Commerce Act: E-Commerce Operator May Risk Cancellation of Business License for Demanding Positive Comments Through Coercion. Source: Xinhua News Agency