China’s ‘People’s Courts’ Resolve Online Disputes at Tech Firms

Colin Rule, who set up eBay’s system, says the company experimented with a community court in India about a decade ago. The pilot program didn’t catch on, but he says that a presentation on the system in Hong Kong caught the attention of Alibaba, and may have helped to inspire what’s likely the first large-scale online jury program.

In 2012, Alibaba’s shopping platform Taobao introduced a kind of a “people’s court”—officially the platform’s User Dispute Resolution Center—to handle customer complaints of poor products or copyright infringement as well as complaints that a user was unfairly penalized by the platform. A jury of 31 unpaid volunteers—buyers and sellers who’ve used the site for at least three months and had their names verified—decided cases based on a simple majority vote.

Alibaba says Taobao no longer uses the system for user disputes, and its customer service department manages those complaints. But a similar program persists on the company’s secondhand marketplace, Xianyu. Seventeen anonymous users weigh in on disagreements over, say, whether a seller accurately described the wear and tear on a used handbag. The system resolves 95 percent of customer disputes, according to research published by Alibaba last year.

Customers on Chinese marketplaces generally pay using digital wallets, which don’t have the sort of purchase protection that credit card companies offer. Instead, Alibaba’s ecommerce sites—like many across Asia—rely on an escrow model: Buyers pay the marketplace, and the money is only released to the seller after the buyer has confirmed they’ve received a satisfactory product.

“This is a way to design a transaction system where you don’t need consumer protections, because the buyer is in control all the way along,” says Rule, the former eBay executive. When sellers open stores on Taobao, they’re required to provide a deposit, which can be used to refund buyers. Sellers must comply with dispute resolution decisions to continue using the platform, but they can appeal decisions or take the case to a government-run court.

In 2018, Tencent’s chat and services app WeChat introduced a system of peer review to combat xigao, a practice that loosely translates as “article laundering”—lightly rewording an article and passing it off as your own, a practice that violates the platform’s standards of conduct, if not the law. Someone who believes their work was copied can file a complaint, pointing to things like similarity in structure or repeating words from a headline. Both sides submit their arguments, and volunteers, who are experienced content creators on WeChat, weigh in. If at least 70 percent of the panel believe article laundering took place, the offending article is removed and replaced with the original author’s piece.

Until recently, big companies were largely free to create these systems, often with implicit consent from authorities, says Georgetown’s Liu. Online services were critical to growing China’s economy, and the bureaucracy can be slow to innovate because of vested interests and conflicting priorities.

Now, though, “public regulations are catching up,” she says. The country’s ecommerce law, which went into effect in 2019, requires companies to respond swiftly to consumer complaints and holds them responsible for fake goods sold on their platforms.