(By You Yunting)  Yesterday we explained the legal status of WeChat LiCaiTong and the exemption clauses of Tencent in Could Tencent be Exempt from Compensation for Losses of WeChat LiCaiTong ? Part 1. We will continue to analyze this in today’s post.

III.   Could Tencent be exempted from liability for the risks of losses?

If any losses arise from the purchase from LiCaiTong, purchasers shall assume responsibilities in accordance with Tencent’s agreements. In my opinion, however, WeChat does not disclose the risks of LiCaiTong completely. Therefore, Tencent will not necessarily be exempt from its liabilities.

1.  Tencent does not inform users of fund name before making purchases.

On the home page of LiCaiTong, Tencent does not inform users of what product they purchase. Instead, Tencent only informs users of that they purchase a monetary fund with smaller risks in their Frequently Asked Questions (the “FAQ”). After entering into the purchase page, the users will be notified that China Asset Management Co., Ltd (the “ChinaAMC”) as a fund provider with the latest 7 days notice of the deposit interest rate. It is only when completing payment that users could know that the product is “华夏财富宝”(000343). That is to say, users do not know what product they purchase before completing the said purchases. The reason why Tencent undertook such a step is to strengthen its brand WeChat LiCaiBao. If any loss occurs, such a step should obviously bring an increase in liabilities for Tencent.

2. The risk disclaimer of LiCaiTong is too optimistic

All risks of LiCaiTong are merged into one sentence in the FAQ section stating that there is no record of loss, on the basis of ensuring stable profits and smaller risk according to the annual deposit interest rate of a monetary fund. Generally, such a sentence is designed to reassure  users of riskless investment. The risk disclaimer providing by similar service companies are as follows:

The risk disclaimer on ChinaAMC who cooperates with Tencent is that purchasing a monetary fund is not the same asplacing money into banks or other deposit financial institutions and the managers cannot guarantee a profit or minimum rate of return and that past performance figures shown are not indicative of future performance.

Its competitor Yu’E Bao displays the risk disclaimer “[a] monetary fund, as a type of fund product, exhibits management loss… please ensure you have a good understanding of this WMP before purchasing even though there is a smaller risk in a monetary fund…please do not make such investment if you do not have the ability to undertake risk.”

Certainly, the disclaimer of Yu’E Bao on its Zhifubao mobile application is not too conservative that “… there arefew times of losses and the remainder is all acquired profits… smaller risk and a little loss.”

The fund product webpage of NetEase shows that “money market fund is a type of smaller risk in a security investment fund without any negative historical profit” (note: such a sstatement is quite opposite to that of Yu’E Bao) and that “even though a monetary fund has a smaller risk, if you do not have the ablilty to undertake such risk, please be cautious with purchases.”

Finally, the disclaimers on the WMP webpage are more conservative generally, with adequate risk disclosure, however, the disclaimers on the mobile applications are optimistic about the risk, with inadequate risk disclosure. This may arise from the small screen real estate offered bya mobile phone, as too many risk disclosures are not in the interest of the company encouraging the transaction. In my opinion, despite the small screen real-estate of a mobile client, there are still legal risks that Tencent should have have displayed because this risk should be informed to users of by the service provider. If the service providers do not fulfill such an obligation and any loss occurs, the internet companies, acting as a service promoter, are likely to be ordered by the court to assume the relevant liabilities.

In conclusion, some readers probably think that, consideringthe small possibility of loss from LiCaiTong, Tencent will not have to assume much risk of compensating users. What I am suggesting is that: firstly, be cautious with minor probability events. If a big company such as Tencent has inadequate risk disclosure per product, the accumulated risks will be great. Secondly, within the evolutionary mobile network, how to best inform users of legal risks in the processing of smaller screen while balancing the commercial attractiveness of the product is a big problem, which involves network users’ responsibility. The legal risks about network users’ responsibility should attract attention from those in the network field.

Reference: Could Tencent be Exempt from Compensation for Losses of WeChat LiCaiTong ? Part 1

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You Yunting：86-21-52134918  youyunting@debund.com/yytbest@gmail.com

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