Amendments to Consumer Protection Law Allows for Public Interest Lawsuits With Limitations

Amended Law Contains Provisions That Could Help Improve Consumer Protections

According to Chinese legal scholars and officials, the amended PRC Law on the Protection of Consumer Rights and Interests (“Consumer Protection Law”) contains provisions that, if implemented as stipulated, could improve consumer protections across a number of areas. New provisions under the amended law include increased compensation standards and penalties for violations; expanded liability for businesses involved in false advertising; the development of e-commerce regulations; and the creation of consumer privacy protection standards.[1] The amended law also includes a provision allowing for public interest lawsuits, an issue that was reportedly the focal point of lawmakers’ discussions during the amendment’s drafting process.[2]  According to Article 47 of the amended Consumer Protection Law, the China Consumers’ Association (CCA), a government-sponsored NGO, would be allowed to file public interest lawsuits on behalf of consumers in cases when “the rights and interests of a large number of consumers have been infringed upon.”

Public Interest Lawsuit Provision Professed to Strengthen Consumer Protections

Some Chinese legal scholars and public interest advocates have called the new public interest lawsuit provision a “breakthrough” in protecting consumers’ rights.[3] According to the CCA’s Director of Legal and Theoretical Research Chen Jian, the amended provision would strengthen the consumer’s standing in court by merging individual cases under the auspices of the CCA, an organization that he argues is better able to represent the interests of consumers and campaign against unlawful business practices.[4] Liu Junhai, professor of law at Renmin University’s Law School, similarly stated that the CCA would be able to “step in and represent a large number of people in court,” whereas individual consumers had faced difficulty filing suits in part because of a lack of “resources to organize group litigation.” [5]

Chinese officials also highlighted the amended provision for clarifying legal standing in consumer-related public interest suits. Secretary-General of the CCA Jiang Tianbo stated that by designating the CCA as the sole legal entity allowed to file public interest lawsuits, the amendment helped clarify Article 55 of the PRC Civil Procedure Law, which allows for the filing of public interest lawsuits but leaves unclear what organizations or individuals would have legal standing to do so.[6]       

Questions Remain About Lawsuit Provision and Implementation

Questions remain about the CCA’s capacity to administer public interest suits effectively. The CCA is a government-sponsored NGO, with 1 national-level office and 33 provincial-level offices.[7] Under the amended law, the CCA would be redefined as a social organization (shehui zuzhi) from its current standing as a social group (shehui tuanti)—a move that will alter its legal standing and funding structure.[8] During initial debate in the amendment’s drafting process, legislators raised concerns about the CCA’s ability to meet the demands of consumers and the potential for conflicts of interest in court due to the CCA’s government funding.[9] Some lawmakers also reportedly called for more organizations to be allowed to represent consumers in court.[10]  National People’s Congress Standing Committee member Wan Exiang, for instance, suggested language should be added to the draft legislation allowing legal aid organizations to file suits on behalf of consumers, stating that they were better suited for the task.[11]

Chinese officials have also expressed uncertainty over how the courts will adjudicate public interest lawsuits under the amended Consumer Protection Law.  Supreme People’s Court judge Zhang Jinxian said it would take time to develop an effective system to handle public interest litigation in China, due to a lack of similar legal precedents in this area.[12]  Zhang further stated that fundamental issues, such as coordinating and enforcing judgments, still needed to be clarified.  Secretary-General of the CCA Jiang Tianbo similarly specified the need for more clarity on the issue, stating that underlying questions, including what constituted a violation of consumer rights and under what circumstances the CCA should file suits, remained unresolved.[13]

Recent Reports Indicate Continued Product Safety and Quality Issues 

Recent reports from Chinese and international media sources indicate that product safety and quality issues remain widespread in China.  According to the State Administration for Industry and Commerce, 3.8 billion RMB (USD 624.79 million) worth of “poor quality goods” were sold in China between 2010 and 2012.[14]  Issues with food safety, including fraudulent advertising and tainted food products, have also been reported on in Chinese and international media.[15] Cases involving product quality and safety issues from 2013 include the following:

• In May 2013, the Guangzhou Municipal Food and Drug Administration revealed that close to half of the rice tested in local markets in the first three months of 2013 contained high levels of cadmium, a carcinogenic metal that can cause significant bodily harm when ingested. Authorities reportedly refused at first to disclose the name of the rice producers, only releasing the information after significant public pressure. (Wall Street Journal, 21 May 13)

• In July 2013, investigators in Shanghai municipality found 90 percent of the drinking straws sold in local markets failed to meet national quality standards.  According to investigators, some straws could contain hazardous materials that could cause harm over an extended period of use.  Investigations found that most of the quality safety logos inspected on packages of straws were counterfeit.  Despite a request by “the market watchdog” that merchants stop selling the straws, they reportedly continued to be sold in some stores. (China Daily, 16 July 13)

• In October 2013, a survey conducted by the People’s Daily and a Beijing-based polling agency found close to half of those polled stated they had been “cheated” after buying products advertised in infomercials. Over 75 percent of those who claimed to be cheated reported not receiving any form of reply to their complaints, while only 12 percent obtained some compensation reportedly after much difficulty.  (China Daily, 1 November 13)

For more information on public interest litigation and advocacy in China, see Section II—The Environment, pp. 126–127 and Section III—Civil Society, pp. 131–135 in the CECC 2013 Annual Report. 

[UPDATE: On December 23, 2013, the Supreme People’s Court released 18 guidelines on how courts should handle civil lawsuits on food and drug disputes.[16] The Provisions of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Dispute Cases Related to Food and Drugs, effective March 15, 2014, emphasizes the protection of consumer rights, outlining under what context consumers can file lawsuits against manufacturers and retailers, among other issues.[17]  The Provisions state that the CCA should refer to the Provisions when filing public interest lawsuits.[18]  The presiding judge of the Civil Trial Court No. 1 of the Supreme People’s Court Zhang Yongjian stated in a January 2014 news conference that “we hope the passage of this judicial interpretation will incite and encourage widespread consumer rights awareness.”[19]]