In our previous article, China Live Streaming Promotions and Beyond- Legal Issues that Marketers Need to Know (http://blog.galalaw.com/post/102g897/china-live-streaming-promotions-and-beyond-legal-issues-that-marketers-need-to-k), we stressed that merchants and livestreamers should pay attention to the development of livestreaming regulation, and offered examples of livestreaming activity that had already drawn official criticism. Soon after we published that article, on June 24, 2020, the China Advertising Association (CAA) issued the Code of Conduct for Online Livestreaming Marketing in China (the “Code”) , which is the first code of conduct focused on online livestreaming marketing and came into effect on July 1, 2020.
The Code defines and standardizes the behavior of livestreaming subjects, including merchants, livestreamers and livestreaming platforms engaged in livestreaming e-commerce. The Code itself does not contemplate issuance of fines or criminal penalties for violations, but rather exhorts those involved in online livestreaming to self-regulate.
The Code requires livestreaming marketing activities to essentially be transparent; i.e., to fully, truthfully and accurately disclose relevant information concerning the underlying products or services. To this end, the Code prohibits one of the common marketing scams: livestreaming subjects are prohibited from misleading consumers by fictionalizing or tampering with transaction data and user evaluations (e.g., by placing utilizing false orders or manipulating the data), or through publishing of deceptive commercials.
The Code defines a “livestreamer” as the person who interacts directly with users in livestreaming marketing activities. For the first time, livestreamers are faced with specific requirements. Livestreamers must complete real name authentication through the platform and shall not assign or lend their account to any third party. Also, livestreaming may not proceed in any place that might interfere with social order or with another’s personal life. The Code prohibits livestreamers from engaging in the following acts during the livestreaming: (i) promoting a vulgar atmosphere or conducting vulgar interaction with the livestreaming audience; (ii) alluding to sex; (iii) attacking, slandering, insulting, abusing, or harassing others; (iv) smoking cigarettes or promoting tobacco products (including e-cigarettes) in a disguised way; (v) absurd or risky content, especially where the dangerous action is likely to be imitated; and (vi) any other acts that violate social ethics.
The platform operators are responsible for the supervision and management of livestreaming activities on their platform, and must issue detailed rules to regulate livestreaming marketing. As part of these rules, the Code requires merchants to provide the platform with various items to ensure there is no fraud, such as: identification materials for the brand’s business entity (including contact information, relevant business license and certificate), as well as trademark registration certificate, brand franchise certificate, and brand sales authorization certificate. The products or services that the merchants provide must be legal, in compliance with the platform’s rules, and shall not infringe third party legal rights.
As we mentioned, compliance with the Code is not supported by fines or similar penalties. However, violation of the Code may result in such responses as issuance of warning, ongoing supervision and required rectification; public criticism; and submission of acts that are suspected violations of laws and regulations to government regulatory authorities for investigation and punishment. The Code appears to be a first step towards significantly increased regulation of livestreaming marketing in China going forward.
Given its growing prevalence, it is no surprise that regulatory supervision and legal enforcement in this area is also becoming more vigilant.