China’s New Advertising Law: Consumer Protection
Advertising in China follows you everywhere. The fast food menu pushed into your hand on the street and the video loop warbling at you from the taxi headrest screen; to name just two of the many. But now a new law is following all that advertising, too.
China’s new Advertising Law came into force on September 1, 2015. Approved by the State Council in April, industry professionals and practitioners have had time to consider the changes and prepare for the new reality. And, it’s fair to say that, unlike the old law, the new law has a specific focus.
The new law is all about defining the new reality (the internet, among others) that didn’t exist when the law first came into force in 1995. For example, an Advertising Publisher must report the accurate number of clicks to Advertisers. Article 36. And pop-up ads must be turned off with just one click. Article 44. But it’s also reflects a very interconnected China, where it is sometimes easy to hide from the law.
Consumer protection, by government design, is very much a part of China’s new reality. Much like the proposed new Food Safety Law, the Advertising Law is very focused on protecting the less sophisticated from unscrupulous operators. Where the old law provided scant definitions in determining liability, the new law provides more certainty.
Administrative enforcement of the law, just like in the old law, primarily falls on the State Administration for Industry and Commerce (SAIC). Where the previous Advertising Law left the responsibility for administering the law fairly vague, the new law spells it out in comparative detail. It appears a coordinated effort at administration is the new normal. Article 6. This coordination starts at the State Council level (as high as the government gets in China), through the SAIC and then working its way down to the local people’s governments at the county and above level.
A large and active government agency, the SAIC has administrative jurisdiction over several areas of Chinese commercial life. Consumer protection features in a lot of those areas in one way or another. The SAIC specific laws include the Consumer Protection Law, the Trademark Law and the Advertising Law. Beginning in 2013, all of these laws have been revised and the new versions put into force.
Liability for False Advertising
The enhanced consumer protections built into the new Advertising Law can be reaildy seen in the new definition of false advertising. The old law had a very bare bones - know it when you see it - type definition of false advertising. Article 28 of the new Advertising Law provides that same general definition. However, it also lists five specific cases in which an advertising is false as a matter of law.
As may be expected, all five are variations on consumer fraud. The second case is especially interesting because it tracks more or less with the SAIC’s other responsibilities in consumer protection. Article 28(2). Article 8 of the Consumer Rights Law lists very similar information that a consumer can expect from a seller. Presumably, the overlap is intentional.
False advertising, under the new law, has also gotten a bit riskier for those involved in the advertising business. The old law provided that an Advertising Publisher or Agent was responsible for any false advertising if it could not provide specific information about the Advertiser. Article 38. The new law keeps that part but adds a bit more to it.
Article 56 of the new law places joint liability on the defined advertising entities, besides the Advertiser, that know or should know the published advertising is false. Liability is assessed for harms caused to any consumers. Acting as a guarantor for what you ‘should know’ (also undefined in the law) in the very hectic world of online advertising should give anyone pause.
With the new Advertising Law, the Chinese consumer, and her well-being, are placed squarely in the center. As China moves towards a more consumer driven economy and places more emphasis on quality of life issues, enhanced consumer protection are the new expectation and reality.
ABOUT THE AUTHOR: Samuel Speed
Samuel Speed is an American lawyer living in Guangzhou China. He advises clients in inbound/outbound transactions, litigation and intellectual property matters.
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.