Authorities warn against abuse of consumer complaint system

Three major Chinese authorities have issued a stern warning against individuals exploiting the complaint system for malicious compensation claims, emphasizing the importance of lawful and honest commercial practices.

On Thursday, the Supreme People's Court, the Supreme People's Procuratorate, and the State Administration for Market Regulation released details of five notable cases to underscore the need for a healthy business environment and orderly market. They also pledged to enhance judicial services and strengthen law enforcement oversight.

"This initiative arises from the increasingly prominent issue of individuals making a living by seeking compensation from businesses," the Supreme People's Court stated. Under Chinese law, consumer protection measures such as "refund one, compensate three" and "refund one, compensate ten" are intended to penalize fraudulent business practices. These rules entitle consumers to a refund and additional compensation of three or ten times the purchase price if they encounter fraud.

While these provisions aim to protect consumer rights, the court revealed that some people abuse complaint channels, reports, and lawsuits to exploit these legal rules for substantial compensation. "Some individuals even fabricate illegal production scenarios to gain illicit benefits, engaging in criminal activities like extortion and fraud," it noted, clarifying that such actions undermine consumer protection efforts, disrupt market order, and harm legitimate business interests.

In one highlighted case, an individual placed cockroaches in meals at various restaurants, demanding free meals and compensation, successfully obtaining 1,663 yuan ($239) in four out of five attempts. In another instance, consumers traveled between provinces to tamper with food products in supermarkets and coffee shops, inserting hair or steel wool into packaging to falsely claim quality issues and demand compensation.

The court pointed out that these cases, characterized by small individual amounts, frequent occurrences, and wide geographical spread, often compel businesses to settle quietly rather than pursue legal action. "Over time, this behavior erodes market confidence and disrupts market order," it warned.

To combat this, the authorities emphasized the need for stronger cooperation between administrative enforcement and judicial authorities. "When suspected criminal activity is identified in complaint handling or civil disputes, it is imperative to promptly refer the case to public security agencies for legal action," they suggested. "There must be no leniency for criminal actions. Decisive measures are especially necessary against those involved in professional or organized criminal activities to maintain normal market transactions," they stressed.