Clause for Concern

The customer claimed the color of the socks did not match the online images, and when Ma tried to contact them, she found her contact was blocked.　

Ma, an outdoor apparel seller on China’s leading e-commerce platform Taobao, suspected the customer wanted the socks for free.　

With three years of experience in the business, Ma prides herself on her high-quality, self-designed products. Her store’s refund rate is 10 percent, much lower than Taobao’s average.　

“I will never ever pander to an unreasonable customer,” she said.　

First introduced by major e-commerce platform Pinduoduo in 2021, the refund-only policy allows buyers to claim a refund without returning a product if the item is deemed unusable due to poor quality. Most platforms adopted it soon after, including Alibabaowned Taobao.　

However, sellers like Ma are concerned that buyers are taking advantage of this policy – which originally aimed to protect consumers – to score free goods.　

Ma filed a lawsuit against Taobao and the customer in Hangzhou Internet Court in Zhejiang Province, China’s first-ever court dedicated to online-related cases. Though the verdict is still pending, Ma remains hopeful. “I’m doing this to protect myself in case someone tries to exploit me again, especially for my higher-priced items,” she said.　

Many sellers have reported similar struggles. In April, a seller from Guangxi Zhuang Autonomous Region sued a customer who refused to return a 12 yuan (US$2) shirt, citing size issues. After court intervention, the customer repaid the seller and covered 800 yuan (US$112) in court fees.　

More recently, another seller surnamed Yang, traveled nine hours by train to retrieve a payment for a 10 yuan (US$1.4) T-shirt. Yang, who was successful, reported that this year alone, his shop received around 700-800 refund-only requests.　

Experts are urging for improvements to the policy before it continues to harm sellers and distort the online shopping environment.

Liu fell victim to the policy when a customer falsely claimed that dog food purchased from his shop killed their dog. After spending 6,000 yuan (US$841) on legal fees, Liu won his case, but the ordeal motivated him to raise awareness through viral videos.　

On a recent trip to East China’s Shandong Province, Liu visited several sellers impacted by the policy. One asparagus seller lost 10 percent of his revenue due to frequent refund requests. The seller told Liu he receives more than 200 refund-only requests a month, citing complaints such as “bad taste” or “I don’t know how to eat it.”　

Duan Lu, a chili pepper seller, said the policy forced him to shut down 10 online stores, leaving only three barely surviving. Duan mentioned that most refund requests were for minor issues, such as tiny weight discrepancies or a couple of bad peppers, yet they were still approved.　

“Most were approved by the platform and the customers often blacklisted me before I could contact them,” Duan said. “In order to help farmers move their peppers quickly, we keep prices low and have thin profit margins. Now, the refund only clause puts me out of pocket,” he added.　

E-commerce platforms like Pinduoduo often encourage buyers to use the refund-only option. While sellers can appeal, they rarely succeed.　

Our reporter experienced this firsthand when she talked with a seller about a defect in a figurine she purchased from him on Douyin. A dialogue box immediately popped up, suggesting she could use the refund-only clause based on the platform’s assessment.　

Further investigation revealed over 160,000 complaints about the refund-only policy on Sina China’s consumer complaint website, and courts across the country have reportedly settled more than 1,400 related cases. Media has reported on a training industry that teaches buyers how to exploit the clause to secure the best deals.

The judge handling the Guangxi case told media that using the clause without an agreement between the buyer and seller is dishonest and may amount to misappropriation of property.　

However, many sellers, including Duan, are hesitant to pursue legal action due to the high costs involved.　

“I have no knowledge of how to file a lawsuit, and it seems absurd to sue a customer when it costs me more than I earn from selling peppers,” Duan told NewsChina.　

While judges sometimes order the losing party to cover court fees, this is rare. Liu, who has reviewed 4,600 cases, found that only 25 percent of sellers received compensation for legal costs, meaning most sellers, even when they win, still have to pay for their lawsuits.　

“In many cases, sellers spend thousands of yuan on legal fees only to recover a few dozen yuan in payment. And most are too busy to deal with these free riders,” Liu explained, adding that many sellers also struggle to find professional legal representation.　

Some sellers, according to lawyer Ma, resort to extreme measures like blackmail or threatening customers to retrieve payment, which can put them at risk of legal violations.　

“I once drove 80 kilometers to collect 15 yuan (US$2) from a customer,” Duan told NewsChina. “I was young and impulsive then. I went to his house and argued with him. His neighbors came out to calm me down, and the customer finally gave me back 10 yuan (US$1.4).”　

Recently, Duan tried to track down a notorious customer in a remote county in northern China who applies for refunds every one or two weeks. Since Duan could not contact the buyer directly, as platforms now use virtual numbers to protect customer privacy, he contacted the area’s deliverer.　

They turned Duan down. “We know this customer is a repeat offender, but no one wants to deal with the hassle,” the deliverer told Duan.　

Liu is now organizing support groups for sellers, where those in the same region of a suspected customer assist sellers in other regions in recovering payments from problematic customers.　

While these groups have helped over 4,000 sellers recover money owed, Ma warns that such practices carry a high risk of legal consequences if extreme tactics are used.

“From the customer’s perspective, the refund-only clause is a crucial safeguard. It simplifies the return process and reduces the financial and psychological burden of refunds. In the long run, it encourages sellers to improve the quality of their products and services,” Chen Wenming, director of Zhejiang Xiaode Law Firm, told NewsChina.　

Now, the refund-only clause is a standard feature across platforms which vie for market share through competitive pricing and strong consumer protection.　

However, as lawyer Ma noted, this has resulted in more sellers losing both their products and money, leading them to push back. The worst outcome would be a breakdown of trust between buyers and sellers, with more sellers leaving ecommerce, turning it into a marketplace for low-quality goods and vendors.　

Huang Ling, a frequent online fruit shopper in Beijing, told NewsChina that she finds it reasonable for sellers to refund only for the damaged portion of an order. For example, if one-third of the fruit she receives is spoiled, she is fine with a refund for that portion only.　

“Refund-only is an important protection for buyers, so I’m against removing it entirely. But I think it should be limited to perishable goods like food. For other products, like clothes, the ‘seven-day unconditional refund and return’ policy is sufficient,” said Gao Rui, another customer in Beijing.　

Huang pointed out that many refund-only cases are settled by the platform alone. “Once, I received 20 yuan (US$3) back for two bad apricots, but my total payment was only 60 yuan (US$8). I didn’t realize the refund amount was determined by the platform’s system,” she said.　

“The system is like a black box, and no seller knows how the platform evaluates a case. If the standards aren’t transparent, it will create more loopholes and unfairness,” said Zhuang Shuai, founder of Beijing Bailian Consulting. “Judging a case precisely is challenging, especially when it comes to determining how much of a product is defective and how much refund is appropriate.”　

Shan Min, CEO of Wanwustore, a shopping platform for maternity and infant products, told NewsChina they do not follow the refund-only policy because their system cannot guarantee accurate evaluations.　

“Understanding and applying the rules is a big challenge for our staff. With thousands of orders to assess, it requires a lot of experience and time,” Shan said. “The refund-only clause came out of good intentions but implementing it properly is difficult.”　

He added that some platforms may be using the clause to attract more users, but if it leans too heavily into marketing, it could lose its original purpose. “We must remember that the e-commerce ecosystem includes both buyers and sellers. We can’t tie sellers to a clause just because it’s popular with buyers,” Shan said.　

In a July interview with Workers’ Daily, a Jiangsu Consumer Council spokesperson stressed that platforms should take responsibility for managing refund issues. They should listen to both parties in a dispute and consider the credibility of both buyers and sellers when implementing the refund-only policy.　

Taobao has already started making changes. On July 26, it announced improvements to the clause, reducing platform intervention for high-rated stores. For stores with a rating of 4.8 or higher, Taobao will no longer automatically support the refund-only option but will encourage direct communication between buyers and sellers. For other stores, varying levels of autonomy will be granted based on their ratings.　

Additionally, Taobao will conduct sample checks on disputed products. If a product is found to have no issues, the platform will compensate the seller for any losses. The platform also pledged to manually review refund-only requests involving large amounts of money and use technology to reject requests from buyers flagged for abnormal behavior.　

Although many sellers remain dissatisfied, arguing that ratings can easily drop due to malicious reviews or factors outside their control, like delivery issues, the revisions are seen as a positive step toward balancing the rights of buyers and sellers.　

“Refund-only was initially intended to target sellers with poor credibility. It was actually an over-correction for the chaotic early days of e-commerce,” said Cui Lili, executive director of the E-commerce Institute at Shanghai University of Finance and Economics. “The recent improvements represent a return to fair transaction practices.”