China Will Punish Internet Companies Using Markup on Loyal Customers
Software

China Will Punish Internet Companies Using Markup on Loyal Customers

Chinese regulators have embarked on so-called “customer bullying,” a widespread practice among Internet companies in which loyal customers who do not intend to move to competitors are charged higher fees.

asia.nikkei.com

asia.nikkei.com

The process related to the incident in Zhejiang province became a landmark. A Trip.com app user in 2020 was charged twice as much as the room cost for new customers – she sued, complaining that instead of “rewarding” users like her, the company was using them by predicting their behaviors using “big data “.

In July, the court sided with the plaintiff, ordering Trip.com to pay her $ 745 for inaccurate advertising. However, no decision was made as to whether Trip.com and other apps were involved in customer bullying. Nevertheless, the case caused a wide public discussion.

The fact is that review sites are full of posts with examples of such a policy, when regular customers are actually punished for loyalty. This applies not only to hotel reservations, but also to food delivery services and other services with the possibility of online orders.

The State Office for Market Regulation has responded to the calls of the disaffected by revising the penalties for illegal pricing practices. Now, companies that are seen in “bullying clients” can simply revoke their business license as a last resort.

Also in November, a law comes into force urging companies to honestly price their services. The test site for new fines and a new enforcement mechanism in this area will be the city of Shenzhen, which is often used for economic experiments. From January, they will collect fines in a new way and consider cases of a similar nature.

At the same time, recognition of dishonest pricing schemes is a big problem. For example, companies might apply different rates to customers in different locations, or only offer discounts to new customers. The new rules for Shenzhen only allow different prices for customers for limited, “reasonable” periods of time.

Some local lawyers believe that the authorities should not limit themselves to half-measures, but to engage in constant monitoring of software pricing algorithms in order to eradicate “customer bullying”.

About the author

Robbie Elmers

Robbie Elmers is a staff writer for Tech News Space, covering software, applications and services.

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