Taobao Introducing Refund System

China’s largest customers-to-customers site Taobao.com rolled out a refund system last week, hoping it will reduce fraudulent activities from dishonest online sellers and reduce the risks for online buyers. The system is to enforce all sellers to submit a mandatory deposit before selling. This deposit will be refunded to buyers in the case where sellers are proved to be guilty of conflicts that favor buyers.

For example, if a seller is proved by Taobao to send the buyer a counterfeit item, this seller is forced to refund in full. The money will be deducted from the initial deposit of the seller.

In a country like China in which the laws of online purchase and eCommerce are not yet mature, there are official statements from one of Chinese consumer associations warning buyers. To avoid fraudulent sellers or merchants online, consumers should:

Ensure the trading site is legitimate by looking at the company name, address and contact numbers.
The prices of the items are not considerably or unreasonably lower than they should be.
Ensure they attain the proof of payments (or invoices).
Make the payments are made only after they have received what they purchased, otherwise use the escrow systems provided by the trading site.

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