Government attitude toward businesses that make a living suing counterfeiters changes

Source:Global Times Published: 2018/11/22 19:13:40

A professional bounty hunter reports a supermarket in Xi'an to the local food administration after finding the manufacturing date of a box of almonds was altered in the supermarket. Photo: VCG

Liu Yanqing scours online shops over eight hours everyday for fake or substandard products - olive oil that contains only five percent olive oil, or television sets that mislabel their screen size.

Once he spots something, he buys it in bulk and then sues the vendor or manufacturer for violating consumer protection laws. If he wins, he get compensated as much as 10 times the price he paid.

Liu is a professional counterfeit hunter, people who purposefully buy fake or substandard products and then seek compensation from sellers by filing lawsuits.

In the past few years, his business has thrived. Managing a company of over 10 people, he told the Beijing Evening News that he files over 100 lawsuits each year and about 70 percent of them can successfully bring him compensation.

But as China's Supreme People's Court changes its attitude on the industry, the good old days of professional counterfeit hunters may soon come to an end.

In May 2017, the Supreme People's Court said in a document that it will adopt special approaches to lawsuits filed by professional counterfeit hunters in an effort to gradually clamp down on the profession. According to the document, apart from lawsuits on counterfeit food and drugs, all other lawsuits filed by counterfeit hunters may get special treatment.

This month, Shanghai authorities issued a guideline which completely changed its tone on counterfeit hunters. Instead of calling them "counterfeit hunters," it refers to them as "professional compensation seekers and whistleblowers," highlighting the profit-driven nature of the profession, Jiefang Daily reported.

According to the guideline, the city will establish a blacklist of compensation seekers and monitor whether they use extortion and fraudulent behavior as they seek compensation.

In 1993, the Law on the Protection of the Rights and Interests of Customers took effect. According to the law, businesses that supply fraudulent products or services shall, on the demand of the consumer, pay compensation at least twice what the consumer paid.

It gave rise to the professional counterfeit hunting industry, which grew along with the expansion of e-commerce in the following decades.

But as it boomed, professional counterfeit hunters have also attracted controversy. While some laud them as defenders of consumer rights who fight with businesses that make or sell knockoffs, others view them merely as bounty hunters, and even extortionists who buy things they know are problematic and then sue the business for it.

The government's attitude to the profession has changed over the years.

In January 2014, the Supreme People's Court issued an explanation stating that sellers and manufacturers of food and drugs should not defend themselves using the defense that the buyer previously knows that their products have quality issues but still buys it. This explanation was seen as a boost to the professional compensation seekers.

But recently, the attitude has changed.

In a symposium on professional compensation seekers in Beijing this September, an official from a district in Beijing said the local authority received over 80,000 complaints this year, and around 10,000 of them are likely from professional compensation seekers.

He said professional counterfeit hunters now increasingly target minor faults in a product's packaging or advertisements, rather than real quality issues that concern consumer rights.

 "If the industry and commerce department spend all their energy in dealing with the minor complaints of these professionals, then they would have limited resources to spare for real customers who have true issues," he said, according to the Beijing Evening News.

Many professional counterfeiter hunters, as a result, have been hiding their identities or even quitting the industry.

Liu, however, cannot agree with the authorities. "Since the law makes it clear that manufacturers or vendors need to pay three times or 10 times in compensation, they should pay it. How can counterfeit fighters be worse than those fraudulent businesses?" he said.

Liu admits that as a professional counterfeiter hunter, in addition to defending consumer rights, profitability is also a motivation. But he thinks there is nothing wrong with it. "The industry and commerce authorities are paid by the country (to crack down on counterfeits). We're not paid."
Newspaper headline: Crackdown on counterfeit hunters


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