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I. High-profile Cases:

The author has noted that two days ago, the Beijing Internet Court published an article entitled *The Internet Is Not a Lawless Zone and No False Conduct Is Allowed in Livestreaming E-commerce* on its WeChat Official Account, to introduce a case heard by the court to the public. The brief facts of the case are as follows:

In 2021, Ms. Xia watched the promotion of a type of baijiu by livestream e-commerce anchor Ma Moumou on an online livestream platform. The anchor introduced that purchasers buying this baijiu in the livestream room could enjoy a substantial discount. Within less than two minutes, the anchor repeatedly emphasized that only the last 100 units of the baijiu remained available out of the 1,000 units initially listed for sale, as the rest had been snapped up. Attracted by such seemingly booming sales, Ms. Xia placed an order immediately. However, upon receiving the goods, when Ms. Xia checked the product link again, she found that the cumulative sales volume of the product was merely dozens of units. Furthermore, the market price of this type of baijiu was not "600 to 700 yuan per bottle" as claimed by the anchor.

Ms. Xia, deeming that she had been defrauded, instituted legal proceedings in the court against e-commerce live streamer Ma XX and the relevant online sales company. After trial, the court held that Ma XX failed to prove either that the market price of the Baijiu involved matched the price he promoted, or that the real-time sales volume of the said Baijiu in the live streaming room on the night in question reached 900 orders. The court accordingly found that Ma XX had fabricated transactions and falsified transaction volume, which constituted fraud. In addition, the sales company failed to perform its duty of prudent review over the conduct of the streamer it engaged for product promotion, and shall bear joint and several liability for problems arising from the streamer's product promotion activities. Ultimately, the court rendered a judgment ordering Ma XX and the sales company to accept returned goods and refund the purchase price, bear the freight costs for returning the goods, and pay punitive damages equivalent to three times the amount of the purchase price.

This case is highly typical of the various irregularities prevailing in the current livestream product marketing sector, and has even received corresponding coverage from China Central Television (CCTV). As can be seen, despite the boom of livestream product marketing at present, with a growing number of celebrities, entertainers and online influencers joining the sector one after another, a multitude of irregularities have also emerged in such marketing activities, which have infringed upon the lawful rights and interests of consumers.

II. Analysis of the Phenomena

Hunger Marketing Trap

As is reflected in the high-profile case mentioned at the beginning of this article, Ma Moumou, a livestreaming e-commerce anchor, actually utilized the most common promotion strategies in livestreaming sales, namely scarcity marketing and low-price preferential promotion. The so-called scarcity marketing refers to the practice where anchors adopt sales pitches emphasizing time limits and quantity limits to create a panic-buying atmosphere with supply falling short of demand, and fabricate the false impression that online viewers in the livestreaming room are scrambling for the commodities, so as to shorten the time spent by consumers on making purchase decisions and improve sales conversion efficiency.

The most common sales pitch is exactly what the involved livestreamer Ma Moumou stated: "Limited-time offer: 1,000 units available, only 100 left now. Dear followers who want the product, do not hesitate any longer and place your order immediately, you will miss out if you act slowly!" However, after consumers make impulsive purchases, when they recheck the monthly sales volume of the product, they find that the sales volume is far lower than the thousands of units claimed by the livestreamer. The actual transaction volume is only in double digits, and some transactions even involve order brushing and other fraudulent acts.

The acts of the involved livestreamer, namely falsifying transactions and fraudulently inflating transaction volumes, have constituted false advertising as prescribed in the *Advertising Law of the People's Republic of China*, falling under the circumstance of deceiving and misleading consumers with false or misleading content; meanwhile, such act of deceiving consumers through falsified transactions also violates the relevant provisions of the *E-Commerce Law of the People's Republic of China* and the *Anti-Unfair Competition Law of the People's Republic of China*.

2. "Low-Price Preferential Fraud Schemes"

The so-called preferential low-price scheme refers to the practice where live streamers highlight the price advantages of products in their livestream rooms, conduct price and product comparisons, capitalize on the psychology of online consumers seeking petty gains, create an atmosphere that consumers will suffer losses if they fail to make purchases immediately, stimulate consumers' purchase intention and facilitate consumption transactions. Common sales scripts include: "The regular price of this product is 699 yuan, while today it is sold at only 199 yuan, the lowest price across the entire internet, in our livestream room. You will never get such a huge discount again if you miss today's livestream!" In reality, however, there is barely any difference between the regular price of the product and its price offered in the livestream room. As is the case involved in this article, the regular price of the relevant Baijiu is not 600 to 700 yuan as claimed by streamer Ma Moumou, while its actual price is around 300 to 400 yuan, which is close to the transaction price concluded during the livestream.

There is another case that occurred in February 2023. A live streamer claimed in his live broadcast room that a Philips mobile phone with an official selling price of RMB 8,999 was mispriced by the company's marketing director, and consumers could purchase it for only RMB 1,999. During the live broadcast, while showing fans the screenshot of the mobile phone page priced at RMB 8,999 on a certain platform, the streamer shouted, "Grab it as fast as you can in our live room today! RMB 1,999, place your orders now!" He stressed that he made no profit from selling the mobile phones and only intended to provide benefits to his "family members (fans)". He stated that he would be fully satisfied as long as consumers give him positive reviews after receiving the mobile phones. The huge price difference of RMB 7,000 between the original price of RMB 8,999 and the selling price of RMB 1,999 made countless fans believe that they had got a great bargain. Within less than one hour, more than 14,000 orders were placed in the live broadcast room, and the rush purchase was extremely booming. After reaching the sales target, the streamer directly ended the live broadcast. After the live broadcast, netizens found that the platform link in the screenshot displayed by the streamer had been removed, and the same model of mobile phone was sold for only RMB 1,880 on other platforms.

The acts involved in the two aforesaid cases have already constituted the act of falsifying low prices, which amounts to price fraud and violates the relevant provisions of the *Provisions on the Prohibition of Price Fraud* promulgated by the National Development and Reform Commission of China.

3. "False Appearance of False Endorsement"

In March 2023, the Beijing Municipal Comprehensive Law Enforcement Corps for Market Regulation investigated and handled a case involving livestreaming sales of alcohol. When selling a type of baijiu produced by a certain Tai Distillery (Group) Health Liquor Co., Ltd. via livestream, the anchor involved deliberately used the liquor bottle and fingers to cover the words "Health Liquor Co., Ltd." or "Health Liquor", misleading consumers into believing that the said baijiu was produced by the well-known Tai Distillery. Law enforcement officers stated: "If the covering act only occurred in a single livestream, it might be an unintentional act, and it is very difficult to determine false publicity based on this alone. However, after reviewing the backup recordings of multiple livestreams, law enforcement officers found that different anchors of the store all covered the words "Health Liquor" in different ways. It is finally confirmed that such acts are intentional covering, which constitute illegal acts."

In this case, the live streamer adopted sales and promotion methods involving false endorsement. The so-called false endorsement refers to the act where a live streamer repeatedly presents or expounds on credibility certificates of products to prove the reliability of the products, including but not limited to sales volume screenshots, positive reviews from netizens, recommendations by internet influencers, official qualifications, and expert endorsements, for the purpose of dispelling users' distrust of the brand and enhancing users' goodwill towards the brand. In addition to obvious qualification forgery, some live streamers, as in the circumstances of the present case, deliberately obscure part of the enterprise name in an attempt to mislead the public and cause consumers to form a wrong understanding of the actual manufacturer of the products. Such act has constituted false advertising publicity, and violates the relevant provisions of the *Advertising Law of the People's Republic of China*.

III. Our Recommendations

In the author's view, although live-streaming sales is a new sales model that has emerged in recent years, it shall still comply with the *Advertising Law of the People's Republic of China*, *Anti-Unfair Competition Law of the People's Republic of China*, *Price Law of the People's Republic of China*, *Law of the People's Republic of China on the Protection of Consumer Rights and Interests* and other relevant laws and regulations. Moreover, the report on the case mentioned at the beginning of this article by China Central Television (CCTV) fully demonstrates that the current chaos in live-streaming sales has attracted sufficient attention from relevant regulatory authorities, and follow-up supervision and rectification will surely follow. Accordingly, we hereby put forward the following suggestions for livestreamers and sales platforms:

Livestreaming e-commerce anchors shall abide by the principle of good faith.

E-commerce livestream hosts providing commodity promotion and marketing services shall be liable for the agreements concluded and commitments made with users during e-commerce livestreaming activities (including but not limited to agreements or commitments related to services, commodities and giveaways). They shall not release false or misleading information to defraud or mislead consumers, nor shall they engage in data fraud practices such as fabricating or tampering with data including transaction volume, user attention, page views and number of likes. Where a host fails to adduce evidence to prove the authenticity of such information as product quality, sales volume, market price and place of origin as claimed, their conduct may be determined as false publicity, price fraud, among other illegal acts.

In the event of any of the aforesaid sales fraud acts, consumers shall have the right to claim from business operators additional compensation equal to three times the price of the goods purchased or the service fees paid in accordance with the *Law of the People's Republic of China on the Protection of Consumer Rights and Interests*. Supervision and inspection authorities shall have the right to impose fines on business operators engaging in false publicity, and may even revoke their business licenses in accordance with the *Anti-Unfair Competition Law of the People's Republic of China* and other relevant laws and regulations.

2. Sellers shall bear the duty of examination

As a seller, a sales company that markets commodities through live-streaming commerce shall bear the obligation of prudent examination over the commodity descriptions made by live streamers during live broadcasts, and standardize the remarks of live streamers in live streaming sessions. It is explicitly stipulated in the *Advertising Law of the People's Republic of China*, *Anti-Unfair Competition Law of the People's Republic of China* and other laws that a seller shall be aware of the publicity statements made by live streamers. Where a seller fails to fulfill the corresponding examination obligation, it shall bear joint and several liability for problems arising from commodity publicity conducted by live streamers.

3. The platform shall bear supervisory and regulatory responsibilities.

As an information network service provider, a livestreaming platform shall strengthen management, strictly conduct entry qualification review, implement the requirements for information filing under the real-name network system, effectively publicize the subject information of livestream rooms and sellers, and improve the mechanisms for entry qualification review of the livestreaming industry, real-time monitoring of livestream rooms and dispute resolution. *Provisions of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Cases Involving Disputes over Online Consumption (I)* explicitly stipulates that where a platform fails to perform its supervisory obligations, it shall bear joint and several liability for acts such as false publicity and fraud committed by livestreamers and merchants.