(By You Yunting) The news came from media1 that a recent sale event that Li Jiaqi performed with L’Oreal went awry. In early October L’Oreal announced on weibo that customers in Li Jiaqi’s live streaming room would be offered “the best of the year and get 50 face masks by paying for 20 ones”. Later L’Oreal gave away thousands of coupons at its official Tmall store, causing the final price much lower than the presale price and refused claims of most customers in the live streaming room. Both Li Jiaqi’s and Wei Ya’s live streaming rooms made an statement of stopping cooperation with L’Oreal. I would like to discuss the legal outcome that L’Oreal should have in this case.
I. What is the legal outcome that L’Oreal should have
First, look at the outcome in civil law. If L’Oreal is found to deliberately cheat customers by advertising the “best of the year” in early October, they should pay to customers a refund and compensation of three times the face pack price of RMB 489, totaling RMB1956. If L’Oreal has full evidence that the case occurred because of negligence, they could not be found to commit fraud but should pay the price difference to customers.
For the outcome in administrative law, the administration for market regulation could confiscate their illegal profits and give them an administrative penalty between one and ten times illegal profits for deliberate or negligent false advertising.
II. What are questionable points in the “best of the year”?
When I saw the advertisement saying “the best of the year to get 50 pieces by paying for 20 pieces” on its official weibo, I couldn’t help admiring L’Oreal for how smart it was at marketing and advertising. The advertisement that appeared straightforward had various meanings and allowed of enough explanations.
1. What was the subject of the best of the year?
There is no subject in“the best of the year to get 50 pieces by paying for 20 pieces”. L’Oreal has not clarified this issue. In the context it might mean the best discount, but L’Oreal said nothing about it and let it be a mystery so that they could defend themselves against customer claims.
2. When did the year start?
According to Baidu Baike2 , “a full year” means a complete period of one year. It is not clear when the year mentioned in the weibo advertisement starts. If it meant a year ago that the weibo advertisement appeared, the face mask would be more expensive during that period than had been sold in Li Jiaqi’s live streaming room, as what actually happened.
Do you think L’Oreal is quite smart after reading the above? However, the market regulatory authority or the court deals with these issues objectively, not by following L’Oreal. That must have been found as illegal. The ambiguity violated several laws. In the consumer protection law, consumers have the rights to know true conditions of products bought or used or services accepted and require businesses provide information about product prices. They infringed consumers’ right of information.
Furthermore, what L’Oreal put on its official weibo was a commercial ad, in which product prices, promises, etc. should be indicated accurately, clearly and explicitly, if applicable according to the Advertising Law. False ads mean ads that contain something false or confusing to cheat or mislead customers.
III. Did L’Oreal do that deliberately or by negligence?
The honesty of a business is reflected by its advertisements. The ambiguous weibo advertisement made people doubt if L’Oreal had a plan for the case.
The market regulatory authority could find out whether L’Oreal intended to do so by ordering it to provide the original 11.11 marketing plan sent by email and requiring Tmall to provide email records between the two parties when necessary. L’Oreal has a perfect business plan for annual promotional activities, including a plan for the specific promotional event, which they have discussed with Tmall thoroughly. If they had planned to give away coupons at the Tmall store before putting the ad on weibo, no doubt they committed fraud by advertising “the best of the year” on their official weibo.
If findings show L’Oreal organized the promotional event ad hoc and broke the promise by negligence with no intention to cheat customers, they might have problems. In the Regulations of Promotional Activities of Retailers by the Ministry of Commerce, retailers should not change the content of the promotional plan within an explicit period of time after the start of the promotional event. In the Consumer Protection Law, product information provided to customers by businesses should be true and comprehensive with no false or misleading advertising. L’Oreal offered bigger discounts after advertising the “best of the year” and consequently might face administrative penalty for false advertising.