E-Commerce Law: Obligations and responsibilities of operators

When the E-Commerce Law becomes effective on 1 January 2019, it will clearly define and specify the responsibilities of operators, business platforms and government regulators. The law will protect the legitimate rights and interests of operators and consumers, as well as promote the healthy and sustainable development of e-commerce.

Q: What is e-commerce? Who are operators under the E-Commerce Law? A: According to the upcoming law, the business activities of selling goods or providing services through the internet and other information networks are e-commerce. However, financial products and services and providing contents of news information, audio and video programs, as well as publishing and cultural products through information networks, are not e-commerce that this law regulates.

E-commerce operators are natural persons, legal persons and unincorporated organizations engaged in the sale of goods or provision of services through the internet and other information networks, including e-commerce platform operators, operators in the platforms and other e-commerce operators that sell goods or provide services through self-built websites and other networks.

The said e-commerce platform operators are entities, other than natural persons, that provide sites for network business operations, transaction matching, information releases and other services for parties to e-commerce transactions, so that the they can independently carry out trading activities on the platform. Operators of the platforms refer to e-commerce operators (including natural persons and other entities) that sell goods or provide services through e-commerce platforms. Accordingly, Taobao sellers, overseas purchasing agents and merchants selling goods or providing services through social networks, such as natural persons or organizations selling products or providing services through the WeChat information sharing platform, are all e-commerce operators that E-Commerce Law will regulate and shall undertake corresponding obligations and responsibilities, in accordance with the provisions of the said law.

Q: What obligations will e-commerce operators assume? A: The said law provides that e-commerce operators, including natural persons and entities, shall complete registration of market entities (except for personal sale of self-produced agricultural and side-line goods, cottage craft products, convenience services that individuals carry out with their own skills and are not required to obtain permission for, sporadic and small transactions, as well as other circumstances that registration is not required, in accordance with laws and administrative regulations), and pay taxes in accordance with the law.

Where relevant administrative licences are required, according to law related e-commerce operators, shall obtain them before engaging in corresponding business activities in accordance with the law.

This means that, unless otherwise provided by the law, overseas purchasing agents, merchants selling goods or providing services through social networks shall apply for and obtain business licences and other administrative paperwork and pay taxes according to law. For example, unless the law provides, a natural person selling food through e-commerce shall apply for and acquire the individual business licence and food business licence, according to law, before engaging in such business.

In addition, e-commerce operators shall issue invoices, in accordance with the law, and protect customers’ right to know, right of choice and equal rights to consume pursuant to the Law on Protection of the Rights and Interests of Consumers. E-commerce operators shall abide by the Advertising Law and draw consumers’ attention to the tie-in sale of goods or services in a conspicuous way. E-commerce operators shall abide by the provisions of the laws on personal information protection to safeguard personal information of users and shall provide relevant e-commerce data to regulators in accordance with the law. E-commerce operators shall provide goods or services to consumers, based on agreements between them. If any e-commerce operator collects a deposit, it shall return it in time and shall not set unreasonable conditions for the refund.

Q: What obligations will e-commerce platform operators assume? A: E-commerce platform operators shall cooperate with regulators to perform regulatory duties on operators of platforms, including: collecting information and verifying identities of operators that apply for entering the platforms to sell goods or provide services; setting up, regularly verifying and updating the files of operators of platforms; prompting these operators to complete registrations of market entities and for tax, according to law. They also have to report the identity details and tax-related information of the platform operators to the market supervision and management departments and tax authorities. In addition; they have to adopt necessary measures and report to regulators in case platform operators are found to be selling goods or providing services in violation of laws.

E-commerce platform operators shall formulate platform service agreements and transaction rules, based on the principles of openness, fairness and impartiality. If platform operators conduct self-operated businesses on their platforms, they shall distinguish and mark self-operated business and the business that operators carry out on the platforms in a conspicuous manner and shall not mislead consumers. Platform operators shall bear the civil liabilities of merchants or service providers for the self-operated business.

Moreover, if e-commerce platform operators know or should have known that the goods sold or services provided fail to meet the requirements for protecting personal and property safety or have other infringements on the legitimate rights and interests of consumers, and fail to take necessary measures, they shall bear joint liability with the operators of the platforms. In the provision of goods or services related to life and health of consumers, if e-commerce platform operators fail to fulfil the obligation of reviewing the qualifications of relevant operators on their platforms, or fail to perform the safety guarantee obligations for consumers, if such goods or services cause damages to consumers, the e-commerce platform operators shall bear corresponding liabilities in accordance with the law, including a fine of no more than RMB2 million (US$291,000).

Zhang Dan is a partner and Guo Yaping is an associate at AnJie Law Firm