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China Continues Efforts to Expand Consumer Privacy Protections

Monday, June 10, 2013
By Paul McKenzie, Gabriel Bloch, and Jingxiao Fang, Morrison & Foerster LLP

After a flurry of legislative and administrative initiatives over the past six months to strengthen privacy protections in the telecommunications, internet, and credit-related sectors, China's legislature now appears to be setting its sights on crafting broader consumer privacy protections. On April 28, the National People's Congress (NPC) released for public consultation draft amendments to the Law on the Protection of the Rights and Interests of Consumers (“Consumer Protection Law”).1 If approved, these amendments would be the biggest amendments made to the Consumer Protection Law since its adoption in 1994.

In addition, efforts continue to strengthen protections in the telecommunications and internet sectors, particularly with respect to the use of mobile devices, sending spam text messages, and the collection of personal information in the education context. The Decision on Reinforcing the Protection of Network Information (“Decision”), issued by the Standing Committee of the NPC Dec. 28, 2012, set the stage for the Ministry of Industry and Information Technology (MIIT) to issue draft implementing rules that, if approved, would require telecommunications business operators and internet information service providers to fulfill privacy-related obligations such as notice, consent, and data security.2 Since then, MIIT continues to issue new rules, opinions, and initiatives that address specific issues raised by the Decision. Most recently, MIIT has issued in final form new rules that regulate the collection of personal information through mobile devices and has launched an initiative to crack down on spam text messages. MIIT also has issued opinions that prohibit telecommunications companies from illegally collecting personal information of students and teachers and sending them materials without their consent.

Consumer Protection Law Highlights

The draft amendments to the Consumer Protection Law would clarify that consumers have a right to privacy, dignity, and respect for ethnic customs and practices, and to have their personal information such as name and image protected when purchasing or using a good or receiving a service. A business operator who infringes these rights would have to cease such infringement, rehabilitate the user's reputation, take actions to mitigate negative effects, apologize, and indemnify the user for losses. In addition to civil liabilities, governing authorities and penalties specified in relevant laws and regulations would apply. If the laws and regulations were silent, industrial and commercial authorities or other relevant administrative authorities could order rectification and based on the circumstances, impose one or more of the following penalties: a warning, confiscation of unlawful income, or a fine of more than one times and less than 10 times the unlawful income. Where there is no unlawful income, a fine of less than

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