🛒 The Rise of Refund-Only Policies
Pinduoduo first introduced the “no-return” refund policy in 2021, aiming to build buyer trust. The policy allowed buyers to receive refunds without needing to send items back, a practice that quickly spread to other platforms, including Taobao, Douyin, and JD.com. This policy was designed to offer consumers a sense of convenience and fairness, but its implementation has sparked criticism from merchants who say it encourages abuse and hurts business.
💼 Merchants Face Mounting Losses
Taobao reports handling over 400,000 “unreasonable” refund-only requests daily. Since adjusting its rules in August, it has paid out nearly $42M to compensate merchants affected by excessive returnless refunds. A study by 100 EC found that 21% of businesses hit by high refund rates saw their profits shrink significantly. With returnless refund rates peaking at 80% for some sellers, complaints have surged, leading platforms to implement new measures to protect merchants.
📜 Regulatory Intervention and Legal Actions
In response to mounting backlash, China enacted the “Interim Provisions on Anti-Unfair Competition on the Internet” in September. These new regulations ban excessive restrictions on merchant transactions and pricing, adding pressure on platforms to curb refund-only abuses. Chinese courts have also taken action, handling around 500 refund-related cases by mid-2024, peaking at 249 disputes last year. Platforms like Pinduoduo are now implementing new rules to help sellers appeal unjust refunds.
🌏 Global Reach and Consumer Concerns
Chinese e-commerce platforms have expanded their refund-only policies abroad. However, consumers in other countries, including South Korea, express unease about the policy’s implications, noting concerns about product quality and environmental impact. While some enjoy the convenience of keeping refunded items, others worry that the policy prioritizes quantity over quality. Both at home and abroad, the policy continues to spark debate, with sellers, buyers, and regulators struggling to find balance.
How can e-commerce balance refunds and fairness?
