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    Why the Law Alone Won’t Stop China’s Crooked Online Sellers

    E-commerce platforms like Taobao urgently need far-reaching codes of conduct to root out unethical business practices.

    Earlier this month, China revised its Anti-Unfair Competition Law to better regulate the country’s e-commerce industry. The revision is long overdue; the law had existed in its previous incarnation since 1993. Under the new rules, online merchants who fake their sales figures or product reviews can be fined and have their licenses revoked.

    While the new law is cause for celebration, e-commerce platforms still lack individual codes of ethics essential to guiding aspects of consumer behavior not covered by the regulations.

    Recently, a seller attempted to bribe me after I received a package I bought from him on Taobao, the country’s Alibaba-owned online marketplace. Inside the box was a long slip of paper encouraging me to submit a good review online; doing so would make me eligible for a 3-yuan ($0.45) cash refund — 10 percent of the price I paid for the product.

    The offer seemed innocent enough until I realized that the very positive reviews that had prompted me to place my order in the first place might have been written by customers eager to get some of their money back. This practice is clearly misleading, yet the tactic often works, and sellers sometimes stoop even lower to discourage buyers from posting negative reviews.

    Last year, a woman in Pingyang, a county administered by Wenzhou in eastern China’s Zhejiang province, left a negative review of a Taobao seller who did not respond to her request for a refund. The seller eventually did reply, but only to mail her paper money burned in offering to the dead — a highly offensive gesture equivalent to wishing grave misfortune on someone.

    Haranguing customers to delete negative reviews is common practice, too. Last summer, after American security developer Matthew Garrett had a less-than-satisfactory experience ordering electronics from China on Amazon, he received three threatening emails requesting that he take down his one-star rating and otherwise-constructive review. A sales representative of the Chinese company from which Garrett had purchased the product initially said she would get fired if Garrett didn’t change the rating, before threatening to complain to Amazon about him. Garrett said he had never had such an experience, even though he regularly reviews products on Amazon.

    Sellers are under enormous pressure to ensure good ratings because the algorithms that sort outlets on e-commerce sites are designed to push better-rated shops to the top of search results. With the proliferation of so many similar shops on Taobao, reviews are a crucial factor for shoppers deciding which sellers to buy from. Until recently, a “positive” rating on Taobao gave the seller one point, a “neutral” rating gave them no points, and a “negative” rating deducted one point from the seller’s overall score.

    The site has now broadened the scope to allow for more nuanced reviews, replacing the three-level rating system with a scale of one to five stars. It has also loosened up the direct relationship between sellers’ review scores and search result rankings, which may alleviate some of the pressure on online merchants. Yet with hundreds of sellers offering identical items on the site, just one negative rating can endanger their chances of survival — and as a result, unscrupulous business practices are likely to continue.

    But intense competition does not excuse the troubling fact that both buyers and sellers are engaging in ethically suspect behavior. There is complicity on both sides: Sellers think it’s fine to bribe or threaten customers into leaving positive reviews, and consumers feel it’s fine to take money in return for dishonest ratings.

    Taobao should now turn its attention toward implementing stricter rules regarding compensation, perhaps using Amazon as a point of reference. Amazon prohibits any kind of compensation for helpful reviews and requests that reviewers who have received a free item in exchange for their feedback disclose that information. Reviews may not be posted by those with a vested interest in the product’s success.

    Sellers must also realize that a code of ethics is essential not only for consumers, but also for sellers themselves. Convincing clients to leave good reviews for average products harms the business environment, as it provides no incentive to those capable of providing better products and services.

    Consumers need to be aware that we all have a responsibility to help create a healthier marketplace. For this to happen, we must raise public awareness of conflicts of interest and the damage they cause. When such conflicts occur, buyers must try to avoid deepening them and should report the situation to platform administrators, thereby saving other shoppers from being misled.

    Establishing an ethical online marketplace is in everyone’s interest: Sellers are buyers in other contexts, and those who dupe consumers might themselves be tricked next time. Official regulations can only do so much; it is only through individual codes of conduct that the e-commerce ecosystem can police itself and become more sustainable.

    Editors: Yang Xiaozhou and Matthew Walsh.

    (Header image: Service staff for a Tmall shop assist customers from an office in Shenzhen, Guangdong province, Nov. 4, 2014. Liu Youzhi/VCG)