Security & Fraud

Chinese Consumer Group Alleges Singles’ Day Discount Fraud

A Chinese consumer group is urging the government to investigate fraudulent discount offers from this past Singles’ Day. The Chinese state-backed group alleges that some 17 percent of the holiday discounts offered on this year’s Singles’ Day online shopping event were fake.

On Monday (Dec. 12), the Chinese Consumers’ Association (CCA) released a report alleging that many major eCommerce platforms — including Alibaba, JD.com and Amazon — had artificially hiked up prices of their products before Nov. 11. In doing so, retailers were able to advertise superficially steeper discounts on the day of the annual shopping festival, conning consumers into believing they were getting bargains.

In some cases, shoppers were paying at, or even above, normal retail price. The CCA study recorded price changes on 12 eCommerce platforms between Oct. 20 and Nov. 25 of this year, said Reuters.

Of all the products surveyed by the CCA, 35 percent of Amazon’s discounted offerings were found to still cost more than regular non-sale retail prices. For JD.com, that rate was at 26.8 percent, and almost 19 percent of surveyed discounted items on Alibaba’s Tmall were still above regular retail prices, according to the CCA’s findings. The CCA is now calling on the Chinese government to intervene and potentially punish offending merchants and eCommerce platforms.

This year’s Singles’ Day sales broke records for Alibaba. Retailers who sell their products on Alibaba saw $17.8 billion in gross merchandise volume during Singles’ Day, up from $14.3 billion in 2015.

China’s State Administration for Industry and Commerce (SAIC) had warned Alibaba, Amazon and others ahead of Singles’ Day that it would be monitoring sales practices for misrepresented advertising, selling of counterfeit products and fraudulent accounting. Maybe they didn’t get the message.

Additionally, the SEC has been scrutinizing Alibaba’s Singles’ Day sales and its accounting practices in general since earlier this year.

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