Pinduoduo’s refund policies are causing vendor lawsuits

Because 2022, pet dog meals vendor Liu Xiaoping has emerged as an unlikely hero to disgruntled e-commerce retailers on China’s popular browsing system, Pinduoduo. By means of social media films, Liu coaches fellow merchants on employing lawful action to fight their biggest grievance — the platform’s unfair refund policies — and choose buyers to courtroom. His followers fondly handle him as “Lawsuit Bro.”

Pinduoduo retailers have very long bemoaned the platform’s refund-devoid of-return coverage, which makes it possible for purchasers to effortlessly ask for refunds for defective solutions without having owning to return them. The dilemma, numerous sellers instructed Relaxation of Globe, is that Pinduoduo grants refunds considerably a lot more liberally than other procuring platforms this kind of as Alibaba’s Taobao or JD.com. In accordance to sellers, this makes it possible for shoppers to exploit the refund coverage to snag freebies. Sellers, who must refund consumers in whole, are compelled to bear the price.

Established in 2015, Pinduoduo grew to become one particular of China’s most common e-commerce platforms by means of a strategy of affordable pricing and gamified purchasing. But smaller sized merchants told Rest of Globe they have shouldered the stress of its swift expansion, been compelled to supply ultra-inexpensive goods, follow rigid purchaser provider procedures, and abide by an unfair refund plan — or else chance remaining penalized by the system. Some disappointed sellers have nicknamed Pinduoduo “Somalia,” evaluating what they see as the company’s exploitative practices to the steps of Somali pirates.

Influenced by Liu, retailers have banded jointly to force back in both equally imaginative and problematic methods. These incorporate filing lawsuits versus buyers, and spamming Pinduoduo-backed retailers with responses and refunds. On Douyin, TikTok’s sister app in China, where he commands a pursuing of above 160,000, Liu teaches fellow retailers to sue customers who exploit refund procedures. In October last 12 months, he also began advertising paperwork with tips on how Pinduoduo retailers could combat refunds and different penalties, for 199 yuan ($29). Extra than 2,000 folks bought the information on Douyin, Liu said. 

By his on the internet tutorials, Liu has popularized his techniques among the the seller neighborhood. According to public courtroom paperwork reviewed by Rest of Entire world, from 2022 to 2023, sellers of smartphone circumstances, fishing cameras, outfits, and infant system bottles have retrieved refunds from buyers, just after the court decided that purchasers really should possibly fork out back again the income or return the products.

But some sellers have also turned to far more hostile strategies, like doxxing and harassing potential buyers. In accordance to a public verdict from November 2022, a houseplant customer alleged in courtroom that a seller despatched her joss papers — sheets of paper burned as choices for the deceased — as an insult, immediately after Pinduoduo granted her a 50 yuan refund for two leaking pots. A 23-yr-outdated Pinduoduo user in Shenzhen, who asked for anonymity to safeguard her privacy, instructed Rest of World the system granted her a refund on a $3 storage box that looked diverse from the shown photo. She then obtained offended phone phone calls from the seller, who threatened to sue her. The lawsuit hardly ever occurred, but she was scared, the shopper said.

In a Douyin clip from March, Liu threatened that sellers could stop by buyers’ dad and mom, and in a different video, shamed a woman faculty university student for requesting a refund for a vibrator. “You cannot get a boyfriend, but you get a refund. It demonstrates you never have a variety coronary heart,” he claimed in the clip. When requested by Relaxation of Entire world about his threatening and shaming of buyers, Liu mentioned that purchasers are not innocent, and that they are the types staying immoral very first. 

Liu doesn’t just goal unique prospective buyers for using gain of the refund procedures, but also condemns Pinduoduo’s organization design itself for enabling “freeloaders.” In two video clips from March, Liu encouraged viewers to get back again at Pinduoduo by flooding Duoduo Welfare Store, reportedly the company’s on the web retail outlet, with hostile remarks and refund requests. Subsequent Liu’s passionate contact to “take revenge,” fellow retailers attacked the shop, along with dozens of other shops they believed to be backed by Pinduoduo, together with Nestlé’s flagship shop. They spammed their client expert services with refund requests — a tactic they dubbed “retail store-bombing.” Duoduo Welfare Store was compelled to shut hours later.

Pinduoduo did not respond to requests for remark right before this article was revealed. Following publication, a spokesperson stated in an emailed statement that the company’s refund coverage allows customers request redress for unsatisfactory buys, and encourages retailers to provide customers well. The spokesperson said that contributors in the store-bombing incident had been making use of the refund plan to justify their “malicious assaults,” and that Pinduoduo experienced served protect the losses of focused brand name retailers. “Strong evidence indicates that it is orchestrated by persons driving the scenes with ulterior motives,” the assertion browse.

Weishao, a Sichuan-dependent homeware seller who chosen to use a pseudonym for panic of becoming identified by Pinduoduo, told Relaxation of World he participated in the keep-bombing. He stated he ordered several baggage of quick coffee from the Nestlé shop, and prepared to request refunds since he considered massive businesses like Pinduoduo deserved to get a style of their own medication. Pinduoduo later blocked this get. Sellers who have been on the system for many years, like Weishao, told Relaxation of Entire world they had seen an increase in refunds more than the past 12 months. “Liu was the initially individual on the web who dared to say “no” to the injustice,” Weishao reported.

Liu stated he by no means planned to turn into an e-commerce vigilante. Born and lifted in the japanese metropolis of Huaian, in Jiangsu province, Liu claimed he examined record in college and experienced desired to turn out to be a civil servant. Just after failing to land a work at the local education bureau, he opened a photography studio, which went bankrupt in 2007. Liu then established up a men’s underwear small business on Taobao. 

In 2021, when the Taobao business enterprise was battling, Liu opened a store on Pinduoduo, selling Royal Canin dog food items and other pet provides. Provided its focus on deal merchandise, the platform experienced turn into a new favorite for modest retailers who lacked the resources important to contend with corporate sellers on Taobao and JD.com. As very long as they retain prices lower, Pinduoduo sellers advised Rest of World, they get superior targeted traffic on the system. 

But Liu before long grew annoyed with Pinduoduo’s “refund with out return” policy. He explained consumers could demand from customers refunds with out offering proof, and his makes an attempt to block the refunds were being rejected by the web site. In the course of his very first 10 months on Pinduoduo, he refunded prospects 117,000 yuan ($17,084) in total, Liu instructed Relaxation of Environment.

¥117,000 The volume in refunds Liu gave costumers throughout his very first 10 months on Pinduoduo.

Liu reported he introduced his grievances to a Pinduoduo agent at the company’s Shanghai headquarters later in 2021, but cops took him to the police station and advised him to go household. So he turned to a law firm, who prompt he sue customers for breach of deal. Liu claimed that his initially lawsuit succeeded: He proved a customer had used a bogus graphic from the online to declare their dog was pooping blood following taking in pet meals acquired from Liu’s store. 

Because then, Liu mentioned, he has sued far more than 20 consumers, and won all but a single situation. Rest of Environment was not able to independently verify the achievements of these lawsuits. Liu claimed retailers had also sued Pinduoduo for its penalties in opposition to bad purchaser company. Quite a few sellers instructed Rest of Globe the platform’s algorithm would fantastic them up to 300 yuan ($44) for rude language, even when they were being texting in a pleasant way. 

In accordance to Lin Zhang, an assistant professor with the University of New Hampshire who scientific tests China’s digital financial system, just one of the motives why Pinduoduo has realized fast progress is for the reason that the system will save expenses on customer providers, utilizing algorithms to handle buyers’ grievances and allowing sellers mediate their very own conflicts. Without adequate channels to voice their grievances, small merchants from time to time negotiate with platforms by taking collective action, Zhang instructed Rest of Phrase.

For example, in 2016, compact corporations in some metropolitan areas boycotted shipping app Meituan for raising fee fee prices. In 2011, Taobao sellers paralyzed model-title stores by putting orders and refusing to spend, as a way of venting their anger to Taobao’s hike in company costs and deposits – funds deducted from sellers if they violated contracts. In reaction, Jack Ma delayed the implementation of the elevated service fees for some retailers.

The retailer-bombing by Pinduoduo sellers final March is another illustration of these types of collective motion. 5 merchants instructed Relaxation of Globe that even though they did not be a part of in, they sympathized with the motivations guiding the incident. “Wherever there is suppression, there is resistance,” said Yang Bing, a nut vendor from rural Henan province, quoting Chairman Mao. 

Jane Lin, a household equipment seller in Guangdong province, explained that just after the shop-bombing incident, merchants designed new chat teams on WeChat and Xiaohongshu to focus on anti-refund approaches. “If there was a excellent space for retailers to communicate up, folks would not do one thing like this,” Lin reported. “Many persons did this jointly, which definitely exhibits the system and its guidelines are problematic.” 

Lizhi Liu, an assistant professor with Georgetown University who research China’s e-commerce sector, told Rest of Earth that whilst protests towards the government convey sizeable threat to the individuals, authorities are extra possible to tolerate revolts towards private companies. The most up-to-date protest could prompt Pinduoduo to come to be additional careful in setting its policies, she explained. 

Soon after the retailer-bombing took put, claimed Liu, a particular person phoning on behalf of Pinduoduo questioned him to connect with for an conclude to the spamming. Liu reported he was not fearful, and he only hoped Pinduoduo would improve its guidelines so he could acquire a split from activism. Now, most of Liu’s revenue arrives from a Tmall shop that sells livestreaming gear, but he explained he keeps the dog food retail store functioning on Pinduoduo, just so that he can carry on to obtain proof of the platform’s exploitative procedures. “When men and women see injustice, they either battle or quit,” he claimed. “If we quit and go to other platforms, we would not do properly, both. So we choose to combat it.”