Case Study: Punishment for False Advertising on Chinese E-commerce Platforms
- China Legal Focus
- Feb 21, 2024
- 3 min read
Updated: Feb 24, 2024
Welcome to our series on Chinese Advertising Law – your concise guide to navigating the regulatory landscape. For foreign brands entering the Chinese market, adherence to advertising regulations is not just a good idea; it's crucial.
In this series, we'll explore real cases where businesses faced the consequences of not playing by the rules. Picture this: fines in the millions and, in extreme cases, the loss of a business license. Join us as we break down these cases in reader-friendly terms, providing a practical roadmap for foreign brands to stay on the right side of Chinese advertising law.
False Advertising on Chinese E-commerce Platforms
Penalty: RMB 50,000
Violation: Issued for deceptive advertising on the E-commerce platform, promoting misleading claims about the products.
Case Description:
This case involves an individual operating a store on the E-commerce platform, focusing on the sale of everyday products such as "Five-Black Sesame Pills." Apart from selling these items, the individual utilized the store's webpage for promotional activities. The webpage featured misleading advertisements, including statements like "Good for kidneys”, etc.
Notably, these advertising claims were directly copied from online sources without any factual basis. This not only raises concerns about the authenticity of the products but also poses a significant risk of misleading consumers. The dissemination of such deceptive content is a clear violation of Chinese advertising regulations.
Relevant Legal Provisions
Advertising Law of the People's Republic of China
Article 4: Advertisements must not contain false or misleading content, and advertisers are prohibited from deceiving or misleading consumers. Advertisers are responsible for the authenticity of the content in their advertisements.
Article 55: Violation of the provisions of this law by publishing false advertisements shall result in the market supervision and management department ordering the cessation of advertisement publication. Advertisers will be instructed to eliminate the impact within the corresponding scope and may face fines ranging from three to five times the advertising expenses. If the advertising expenses cannot be calculated or are significantly underestimated, fines may range from twenty thousand to one hundred thousand RMB. For those with three or more violations within two years or having other serious circumstances, fines may range from five to ten times the advertising expenses. If the advertising expenses cannot be calculated or are significantly underestimated, fines may range from one hundred thousand to two hundred thousand RMB. Additionally, the business license may be revoked, and the advertising examination authority shall revoke the advertising examination approval document. No advertising examination applications will be accepted within one year.
Commentary
This case involves a penalty of RMB 50,000 imposed on an individual operating a store on the platform, selling ordinary food products. The misleading advertisements on the store's webpage, including claims such as "Good for kidneys", etc. were copied from the internet without any factual basis. These deceptive practices have the potential to mislead consumers, constituting a violation of Chinese advertising regulations.
The product pages of online shopping typically include factors closely related to the product itself, such as ingredients, performance, usage, quality, place of origin, producer, and expiration date. In an effort to boost product visibility and capture attention, some e-commerce operators often stack multiple keywords in product titles or exaggerate product descriptions. However, for some merchants, the keywords used may not align with the actual product, lacking factual basis and potentially constituting false advertising.
Even for products with certain socially recognized efficacy, during inspections by regulatory authorities, product operators/advertisers may be unable to provide objective proof for the content of their advertisements, such as inspection reports, laboratory reports, or awards. In such cases, the advertising may also be deemed as false advertising.
This case highlights the importance of adhering to truth in advertising, not only to avoid legal consequences but also to build trust with consumers. Businesses should ensure that their advertisements are factually accurate and do not engage in deceptive practices, as the repercussions extend beyond financial penalties to potential revocation of business licenses.
As foreign businesses navigate the Chinese market, understanding and complying with advertising laws is essential for establishing a positive brand image and avoiding legal pitfalls. The case serves as a cautionary tale, urging businesses to prioritize truthfulness in their advertising endeavors on Chinese platforms.
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