New refund policies from Alibaba’s Taobao and JD.com spark fears of customer abuse among merchants

New “refund only” policies introduced by Chinese e-commerce players including Alibaba Group Holding’s Taobao and JD.com have sparked concern among some sellers about potential abuse of the terms, according to merchants and analysts.

Taobao and JD.com in late December introduced new policies that – in certain circumstances – allow shoppers to receive a refund for a product they are unhappy with even though they keep it. This may occur when a consumer complains about the poor quality of a product, or about an inaccurate and misleading description on the platform. Alibaba owns the South China Morning Post.

Alibaba, whose company mission is “to make it easy to do business anywhere”, had a long internal debate over whether to follow rival Pinduoduo, which was the first to offer a policy whereby a shopper can receive a refund for a product they are unhappy with even though they do not return it.

Even though some merchants have raised concerns about potential abuse, Alibaba came down on the side of consumer rights in such a situation as merchants are ultimately dependent on buyer confidence, according to a person briefed on the discussions who asked not to be identified.

However, since the policy went into effect last week there has been an increased number of claims under the “refund but keep the purchase” policy, according to one merchant who runs apparel shops on both Taobao and JD.com, adding that some consumers were looking to exploit the situation.

The 33-year-old online shop owner, who spoke on condition of anonymity for fear of retribution from the platforms, said that the new refund policy could backfire and hit sellers who invest in high-quality products, because they will bear higher costs in the event of more claims.