On 25 October 2013, China’s Standing Committee of the National People’s Congress of the People’s Republic of China passed an amendment to modernise the Law on Protection of Consumer Rights and Interests (Consumer Protection Law), the first overhaul since it’s adoption in 1993. The amended Consumer Protection Law will take effect from 15 March 2014 and will provide specific protection for consumer privacy in China for the first time. The amendments reinforce the Decision on Enhancing Internet Information Protection from December 2012. As a result, binding privacy protection obligations will now extend to sellers of consumer goods as well as internet service providers and telecommunication providers in the context of the increasing popularity of e-commerce.
Under the amendments businesses will be required to:
- Obtain explicit consumer consent to the collection and use of their personal information
- Expressly inform consumers of the purposes, method and scope
for
the use of their personal information - Keep all consumer information confidential
- Are banned from selling, illegal providing or otherwise disclosing consumer information to others
- Put in place technical measures to adequately secure consumer information
- Take active steps to mitigate damage in the event of actual or suspected unauthorised disclosure of consumer information
- Obtain explicit consent prior to contacting consumers with commercial or marketing information
It is anticipated the amended Consumer Protection Law will greatly enhance consumer privacy rights and boost commerce in China. Jia Dongming, director of the civil law working committee under China’s Standing Committee commented “Strengthening consumer confidence will benefit the whole nation's economic development and boost domestic demand."
However, critics believe any benefits are equally outweighed by the costly burden this will place on businesses. Organisations will have to sharpen their internal data management and appoint data protection officers to ensure they keep step with the requirements of the revised Consumer Protection Law. A failure to comply could result in companies facing the increased penalty of 500,000 yuan, a significantly greater deterrent than the previous fine of 10,000 yuan. Beyond the administrative expense, costs are likely to spiral even further with the burden of proof shifting from the consumer to businesses in the event of disputes. In such scenarios consumers are likely to win out, bolstered by the support of China’s Consumer’s Association which will now be able to initiate class-action litigation on behalf of consumers.
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