China is going after click farms and fake online sales

China enacted sweeping changes to a business competition law to address fraud in the e-commerce industry, which is plagued by malfeasance ranging from fake positive reviews to merchants goosing sales numbers.

The National People’s Congress adopted revisions Saturday to the Anti-Unfair Competition Law intended to address online retailers, the official Xinhua News Agency reported. The changes take effect January 1 but were announced days before Alibaba Group Holding’s November 11 Singles’ Day bargain extravaganza, which dwarfs Black Friday in the US in terms of revenue.

The Chinese law initially took effect in 1993 as a way to protect consumers and businesses from unfair market practices. At that time, none of China’s biggest online companies — including Alibaba, Tencent Holdings, Baidu and JD.com — even existed. As e-commerce developed and prospered, attendant problems grew with it.

These latest revisions stipulate that operators shouldn’t deceive consumers by faking sales or employing “click farms” to rack up positive product reviews —increasingly common practices that have drawn the ire of buyers. And the rules encompass the entire breadth of internet commerce, from online goods and movie ticketing to food delivery. “You now cannot delete bad comments or employ people to leave good comments,” said Christine Yiu, an intellectual property law expert and partner at Shanghai-based Bird & Bird. “It’s a welcome change that echoes with the whole direction that China’s trying to move in, by strengthening old protections and discouraging infringement in the market.”