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Chinese Premier Li Qiang signed a decree of the State Council, unveiling the refined Regulations for the Implementation of the Nation's Law on the Protection of Consumer Rights and Interests (hereafter referred as “Regulations”). 1 Effective on July 1, 2024, the Regulations made detailed provisions on business operators' obligations, including the protection of consumers' personal and property safety, the handling of defective products, the avoidance of fraudulent advertisement, price transparency, quality guarantee, the protection of consumers' personal information, as well as the safeguard of rights and interests of the elderly and minors as consumers.
The Regulations also covers online consumption, requiring businesses to provide goods/services as agreed with consumers; standardizes consumer complaint and compensation procedures, prohibiting the use of consumer compliant for improper gain or market disruption. In addition, governments are tasked with strengthening guidance, supervision, and enforcement to promptly address violations of consumer rights. Besides, the Regulations specifies the duties of consumer associations.
The main areas of concern for cosmetics operators are summarized as follows:
1. Cosmetic Gifts Compliance
The Regulations stipulates that gifts, in addition to general products and services, must also meet safety requirements.
When operators offer goods or services to consumers (including those free of charge, e.g., as rewards, gifts, or trials), they must ensure these items comply with personal and property safety protections. If the complimentary goods or services have defects that do not violate mandatory legal provisions and do not impact normal performance, the operator must truthfully inform consumers before the offering.
2. Cosmetic Marketing Compliance
1) Safeguarding consumers' right to know pricing
Some merchants employ various discount promotions as well as complex marketing rules and price algorithms, resulting in disparate actual prices for consumers purchasing the same item concurrently. The Regulations prohibits merchants from setting different prices or fees for the same product or service under the same transaction conditions, without consumers' knowledge.
Marketing activities that lead to price/fee variations under the same transaction conditions must be conducted transparently, with consumers' full awareness and understanding.
2) Unsolicited sales contact restrictions
The Regulations prohibits operators from sending "sales information" or making "sales calls" without the consumer's authorization. If consumers agree to receive such communications, operators must provide a clear and convenient method for the consumer to opt-out. Upon the consumer's request to cancel, operators must immediately cease all commercial outreach.
3) Prohibition of fake orders and reviews
The Regulations addresses unfair practices that undermine fair competition, such as:
Artificially inflating "likes" or fake social media promotion
Fabricating product reviews or evaluations, or offering incentives for positive reviews
Deleting negative ones
Operators are prohibited from manufacturing transaction data, business information, or user reviews. They must provide consumers with truthful, comprehensive, and easily understandable details about their goods and services. Operators shall neither engage in false or misleading publicity, nor deceive consumers by misrepresenting their qualifications, honors, and/or other business information.
4) Prohibition of deceptive efficacy claims
The Regulations prohibits operators from making false or misleading claims that fabricate or exaggerate the therapeutic, health, or wellness benefits of their goods and services. Operators must not engage in propaganda that deceives or induces consumers, particularly vulnerable groups like the elderly, to purchase products or services that do not actually meet their needs.
3. Cosmetic Sales Compliance
1) Accountability for sellers and service providers
The Regulations establishes the principle of "whoever sells is responsible" and "whoever provides services is responsible". Consumers have the right to directly contact and engage with sellers and service providers. The government also encourages advance compensation. When merchants in shopping malls, online platforms, and scenic spots, etc. refuse to fulfill their duties to consumers, the Regulations recommends that these venues provide advance compensation to the affected consumers.
The Regulations also encourages online dispute resolution and strengthens administrative mediation processes.
2) Transparent disclosure of product and service details
Operators must clearly and prominently display essential information about their goods and services, including:
Product name, price, and pricing unit; or
Service name, content, price, and pricing methodology.
This information must be complete, accurate, and presented in a clear, eye-catching manner.
Operators who make representations or commitments about the quantity, quality, price, after-sales service, liability, or other aspects of their goods and services through commercial promotions, product recommendations, product displays, statements, store notices, or similar means, must fulfill those commitments for consumers who purchase the products or receive the services.
3) Restrictions on tying and exclusive sales practices
The Regulations prohibits operators from using coercive means, such as violence, personal freedom restrictions, or technical barriers, to force consumers to purchase specific goods or services, either directly or in a disguised form.
If operators provide goods or services through bundling, matching, or other combinations, they must prominently draw consumers' attention to this fact. In addition, consumers must not be excluded or restricted from choosing alternative providers.
4. Compliance of Cosmetics Live Streaming
Live streaming has innovated consumption scenarios and expanded consumer choice, but has also introduced new challenges. The complex ecosystem with the engagement of multiple entities, long supply chains, and difficulties in online-offline management have led to issues such as false marketing, product mismatch, and difficulties in product returns.
1) Obligations of live streaming operators
Operators providing goods or services through live streaming and other online means must fulfill their legal obligations for consumer rights protection. This includes:
Establishing and improving consumer dispute resolution mechanisms;
Providing consumers with relevant information about live streaming room operators and marketing personnel upon request, to aid in dispute resolution;
If live streaming content constitutes commercial advertising, adhering to the obligations of advertisers, advertising operators, or spokespersons as per advertising regulations.
2) Transparent identification of operators
Operators must prominently display their real names and identifying marks at their business premises. For goods or services provided through the internet, TV, phone, mail order, etc., the operator's real name and mark must be clearly indicated on the homepage, video, voice, product catalog, and other materials.
If the goods or services are actually provided by a different operator, the name, address, and contact information of that operator must also be provided to consumers.
5. Compliance of Consumer Compliant Handling
In recent years, malicious claims and abuse of the consumer protection system appear frequently, undermining the business environment and hindering legitimate consumer rights protection. Some have even been caught engaging in product swapping, the substitution of the target product with another non-compliant product, and the return of a counterfeited product, and some make their living by falsely claiming product defects to profit unfairly.
1) Efficient complaint resolution mechanisms
Cosmetics operators should establish convenient and efficient complaint handling processes to promptly resolve consumer disputes. This includes:
Implementing systems like first-contact responsibility, advance payment, and online dispute resolution to prevent and address issues quickly;
For disputes requiring product quality assessment, enabling consumers and operators to jointly determine the testing agency. If they fail to reach consensus, the relevant administrative department can designate the testing agency;
For major, complex disputes impacting many consumers, the administrative department can include them in random inspections and testing by qualified institutions.
2) Legitimate grounds for compensation
Consumers have the right to demand compensation from operators engaging in fraudulent behavior when providing goods or services. However, this does not apply to minor defects in label, instruction, or promotional material that neither affect product quality nor mislead consumers.
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