And the rules encompass the entire breadth of Internet commerce, from online goods and movie ticketing to food delivery.
“You now cannot delete bad comments or employ people to leave good comments,” said Ms Christine Yiu, an intellectual property law expert and partner at Shanghai-based Bird & Bird.
“It’s a welcome change that echoes with the whole direction that China’s trying to move in, by strengthening old protections and discouraging infringement in the market.”
Another example of such fraud in China is e-commerce sites buying up movie tickets to artificially boost a film’s box-office rankings and to drum up popularity, Ms Yiu said.
The new legislation states that businesses should be self-policing when upholding market order. Among the punitive measures outlined, online merchants that fake sales or feedback can be fined as much as 2 million yuan (S$410,000) or lose their business licence, the state-run China Daily newspaper reported on Monday (Nov 6).
“The revision will better address new problems emerging in the market and protect the rights and interests of both business operators and consumers,” said National People’s Congress’s Standing Committee official Yang Heqing on Saturday, according to Xinhua.
The practice of “brushing” – faking sales transactions to boost rankings or draw more traffic to a website – has plagued Chinese online commerce for years. Much of the criticism focused on Alibaba, the market leader, which has a complicated history with brushing operators and has been trying to stamp out such practices.
The Hangzhou-based company sued Shatui.com last year for allegedly linking merchants with people willing to falsify purchases and reviews to help boost sellers’ rankings. Along with the lawsuit, China’s biggest technology company warned that merchants found to be violating its policies can have their credit scores cut or businesses shut down.
With a billion listings on Alibaba’s Taobao website alone, standing out is critical for online sellers. The art of brushing comes down to tricking a site into believing a purchase has been made and then disguising the movement of money that makes it happen. The fake buyer is then paid by the brushing company.
Chinese companies aren’t alone in battling fabricators. Amazon is trying to quash fraudulent reviews, and Facebook is combating “fake news.” Yet China’s operators take things to the next level by crowdsourcing the tasks to thousands of people.
“We tried to keep the interests of vendors and customers in mind while revising the law because we need to keep fair market order while encouraging innovation in the cyberspace,” director Yang Hongcan of the Anti-Monopoly and Anti-Unfair Competition Enforcement Bureau of the State Administration for Industry and Commerce, said, according to China Daily.