Analysis of illegal WeChat ads in Shanghai (2019)

By Quan Kaiming and Zang Yi, AllBright Law Offices

Judging from whether advertising fees are correspondingly paid to Tencent, WeChat ads may fall into two categories: (1) payment is made to Tencent for ads such as information stream ads on the Moments, in-stream ads on official accounts, and rewarded ads in applets; and (2) no payment is made to Tencent for ads that are mainly released by advertisers through their own WeChat official accounts or Moments, such as ads directly posted through WeChat official accounts and “video accounts”, product placements in advertorials, and product ads pushed by WeChat stores.

Quan Kaiming
AllBright Law Offices

Based on data from third-party platforms for big data analysts like Wolters Kluwer and China’s national database for administrative penalties, it has been found that, since 2015, the number of cases involving illegal WeChat ads have been rising annually, with 367 in 2017, 1,037 in 2018, and 1,222 in 2019. Penalties for illegal ads were mostly reported from Jiangsu, Zhejiang and Shanghai, and the figures for Beijing, Guangdong province and other developed regions also lead the rankings. Among them, Shanghai reported 1,440 illegal WeChat ads, the highest amount in the nation, accounting for 44.1% of the total.

In view of this, the authors conducted a sample analysis of Shanghai, with the most penalties for WeChat ads in 2019, in an effort to provide some clues for companies to ensure advertising compliance.

Penalty cases cover all districts, among which Pudong New Area saw the largest amount, and suburbs witnessed stricter enforcement.

By district, Pudong New Area reported the most cases, 165, followed by Qingpu district with 130, Minhang district with 122, and Jinshan district with 112. Except for Xuhui district (45 cases) and Putuo district (42), the figures for all other districts are greater than 50. The General Enforcement Team of the Shanghai Municipal Administration for Market Regulation found 146 cases involved a relatively higher value, and the corresponding penalties greatly exceeded the figures identified by the district authority.

Zang Yi
AllBright Law Offices

Causes of the penalty cases are relatively focused, with most related to false advertising.

Among the causes for such cases, false advertising had the largest share, involving 153 cases, followed by illegal ads that contained words of absoluteness such as “state-level”, “top class” and “best”, with a total of 62 cases. Other than those for medical care, medicine and medical devices, there were 31 ads that involved disease treatment functions, or cited medical terms, or used terms that could confuse the promoted products with drugs and medical devices. The illegal ads posted by persons or individual businesses were mainly false.

Illegal ads widely cover a number of sectors, mainly involving “national economy and people’s livelihood”.

Industries such as culture, media, medicine, beauty, education and training, e-commerce, real estate, catering and hotel, healthcare, manufacturing, investment and financial management are highly prone to illegal ads on WeChat.

Generally speaking, in the field of education and training, “ads involving promises for educational and training effects” and “the use of beneficiaries’ name/images as proof to support recommendation” caused frequent violations. Ads from the pharmaceutical industry mainly involved “assertions or pledges of efficacy and safety”, while ads for the beauty business were mainly “false propaganda”. The illegality of food-related ads, especially those for health food, was mostly attributable to “involvement with disease prevention and treatment functions”, and illegal causes for real estate ads were focused on “commitment of appreciation or return on investment”.

Illegal ads are mainly disseminated through WeChat official accounts, which account for 80% of the total.

Most illegal WeChat ads appear on official accounts (88.86%), and a few are shown in WeChat stores (4.24%), WeChat Moments (2.38%), applets (1.59%), WeChat chats, including WeChat groups (1.59%) and paid promotional contents on WeChat (1.33%).

The penalties for illegal ads span a wide range, most from RMB10,000 (US$1,500) to RMB100,000.

Among the cases regarding illegal ads on WeChat, most ended up with a penalty ranging from RMB10,000 to RMB100,000, with a total of 162 cases. Illegal ads with high penalties were mostly false ads, “ads that harm the dignity or interests of the country, or have revealed state secrets,” and “ads that use, directly or in a disguised manner, the name or image of state organs or their staff”. In the latter two circumstances, the penalties were mostly greater than RMB100,000.

Notes on compliance

The path to compliance needs to be proactively explored.

First, it’s advisable to use big data-backed regulatory platforms to supervise WeChat, which makes it easier to find clues of illegal ads. Second, reports regarding WeChat groups and Moments have become important sources of clues, and the relatively closed social ads constitute another key area subject to penalty.

Third, illegal ads highlighted by words of absoluteness were mostly found after being reported, therefore companies need to focus their screening efforts on the above-mentioned prohibited key words. Reports accounted for about 40.17%, but the penalties were not quite as high, mostly less than RMB20,000. The reports were mostly filed based on absolute wording, but they had a greater impact on corporate credit.

Function introduction has become a high-incidence area for false ads.

In 2019, Shanghai reported 57 penalty cases due to a violation in the “function introduction” section on the WeChat official account, accounting for 16.8% of the total illegal ads on WeChat official accounts. The function introduction section on the WeChat official account is a paragraph of text for describing the official account when it is first established.

As it appears at a quite early stage, and in an inconspicuous way, companies often ignore such wording when censoring ads. Consequently, this column has become such a hotbed for the high incidence of illegal ads on WeChat public accounts that great attention should be paid to this area.

Comprehensive management of all platforms.

Companies generally post ads in various media available to them, rather than limiting their means to WeChat only. Among the relevant cases in 2019, 47 involved illegal ads on WeChat, web pages or Weibo of the releasing party at the same time. Therefore, companies must effectively perform work on comprehensive advertising compliance, otherwise their overall operations might be affected.

Quan Kaiming is a partner and Zang Yi is a paralegal at AllBright Law Offices.

Xi Qing Cai Meng AllBright Law Offices compliance

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