Consumer Fraud And Criminal Penalties In China

17 Oct 2025 --
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⚖️ 1. Legal Framework for Consumer Fraud in China

Consumer fraud in China is primarily regulated under:

Criminal Law of the People’s Republic of China (PRC)

Article 224 – Selling counterfeit or inferior commodities causing harm.

Article 225 – Manufacturing or selling fake or substandard food, medicine, or health products.

Article 226 – Producing or selling fake or substandard medical devices.

Article 227 – False advertising that deceives consumers.

Consumer Protection Law of China

Establishes consumer rights, including truthful information, product safety, and fair trade.

Provides civil remedies and administrative enforcement.

Regulations on Food Safety and Drug Administration

Specific to foods, medicines, health supplements, and related services.

Violations often lead to criminal prosecution if public health is endangered.

Key Elements of Consumer Fraud:

Deception or Misrepresentation – Selling goods/services under false claims.

Defective or Counterfeit Products – Products not meeting legal standards.

Financial Loss to Consumers – Fraud must result in material damage.

Intentionality – Willful acts are punished more severely.

⚖️ 2. Criminal Penalties

Fines: Often calculated as multiples of the illegal gains or the value of goods involved.

Imprisonment:

Minor fraud: <3 years

Significant fraud or causing serious harm: 3–10 years

Severe cases endangering public safety: 10 years to life

Confiscation: Illegal profits and property used in the fraud are seized.

Aggravating Factors:

Large-scale operations

Involvement of organized crime

Production of counterfeit medicine or food

Recidivism

⚖️ 3. Detailed Case Analyses

Below are five landmark consumer fraud cases in China:

Case 1: Sanlu Milk Powder Scandal (2008)

Facts:
Sanlu Group produced milk powder contaminated with melamine, affecting thousands of infants nationwide.

Court Ruling:

Executives convicted under Articles 224 and 225 (selling harmful food, causing severe harm).

Sentence: CEO – life imprisonment; several executives 5–15 years.

Companies fined and assets confiscated.

Significance:
This case set a precedent for severe punishment in cases involving consumer harm, especially children.

Case 2: Shandong Fake Medicine Case (2012)

Facts:
A pharmaceutical company manufactured counterfeit antibiotics and sold them across multiple provinces.

Court Ruling:

Convicted under Article 225 for producing and selling fake medicine.

Sentence: Ringleader – 12 years imprisonment; accomplices 6–10 years.

Confiscation of company assets.

Significance:
Illustrated strict criminal liability for counterfeit medicines endangering public health.

Case 3: Zhejiang Counterfeit Electronics Case (2015)

Facts:
A factory produced and sold counterfeit electronic goods, including chargers and batteries, that caused several consumer injuries.

Court Ruling:

Convicted under Article 224 for selling inferior products.

Sentence: Owner – 7 years; managers – 4–6 years.

Fines equaling 2–3 times the illegal profits.

Significance:
Demonstrated that physical harm or property damage from defective products significantly increases punishment.

Case 4: Jiangsu Online Fake Goods Case (2017)

Facts:
A group operated an online store selling counterfeit luxury items, deceiving thousands of consumers.

Court Ruling:

Convicted under Articles 224 and 227 (selling counterfeit goods and false advertising).

Sentence: 5–8 years imprisonment; online platform accounts blocked; fines imposed.

Significance:
Highlighted the rise of e-commerce fraud and how courts treat online consumer fraud.

Case 5: Guangdong Health Supplement Fraud (2019)

Facts:
A company falsely claimed its dietary supplements could treat chronic diseases, misleading elderly consumers.

Court Ruling:

Convicted under Article 227 for misleading advertising and endangering consumer health.

Sentence: CEO – 6 years imprisonment; executives 3–5 years.

Compensation ordered for victims.

Significance:
Reinforced legal protections against fraudulent health claims, especially targeting vulnerable populations.

Case 6: Henan Counterfeit Baby Formula Case (2020)

Facts:
A factory produced baby formula that did not meet national nutritional standards, selling it under the guise of “premium formula.”

Court Ruling:

Convicted under Articles 224 and 225.

Sentence: Ringleader – 10 years; accomplices 5–8 years; confiscation of assets.

Significance:
Emphasized consumer protection for infants and minors, aligning with strict food safety laws.

⚖️ 4. Policy and Judicial Trends

Severe Punishment for Public Health Risks: Food, medicine, and baby products violations attract the harshest penalties.

E-Commerce Accountability: Online platforms facilitating fraud are increasingly targeted.

Aggravating Factors: Large-scale operations, organized groups, and harm to vulnerable populations increase sentencing.

Civil Compensation: Courts consistently require restitution alongside criminal penalties.

Regulatory Coordination: Courts work with food, drug, and consumer protection authorities to ensure compliance.

✅ Summary Table of Representative Cases

Case	Product/Service	Crime	Sentence	Key Principle
Sanlu Milk	Infant formula	Contaminated food	Life / 5–15 yrs	Severe harm to children aggravates penalty
Shandong Medicine	Antibiotics	Counterfeit medicine	6–12 yrs	Public health risk triggers harsh punishment
Zhejiang Electronics	Chargers, batteries	Inferior products	4–7 yrs	Physical harm from defective goods
Jiangsu Online Goods	Counterfeit luxury items	Fraud & false advertising	5–8 yrs	Online deception treated seriously
Guangdong Supplements	Health supplements	False claims	3–6 yrs	Misleading vulnerable consumers
Henan Baby Formula	Baby formula	Counterfeit & substandard	5–10 yrs	Protection of minors prioritized

This demonstrates that consumer fraud in China is treated as a serious criminal offense, particularly when it affects public health, vulnerable groups, or large-scale operations. Courts combine imprisonment, fines, asset confiscation, and victim compensation to ensure justice.