A Chinese e-commerce platform claiming to allow users to apply for a refund without returning the product, known as a “refund-only” policy,  faces a backlash from customers angered by the policy’s fine details. The platform has up to RMB 2 billion ($284 million) in refunds that have not been issued to shoppers who applied for the refund-only service, a user said in a recent Weibo post.

Why it matters: The spectacular promotion, garnering attention and criticism online, comes as China’s mainstream online retail platforms are working to minimize the impact of their refund policies. In this case, Numerous obstacles in the way of users’ succeeding with a  refund-only request have left consumers, expecting to achieve a “zero-cost purchase,” feeling cheated by the advertised offer.

Details: The platform, called Jingtaotao takes the first characters of China’s top e-commerce players JD and Taobao, promoted the deal on its standalone app saying it will “open up a new era of refund-only internet models.”

• Jingtaotao offers two drastically different prices for the same item. Apple’s new iPhone 16 with 128GB storage costs RMB 5,999 for regular buyers, but a steep RMB 39,994 for shoppers who intend to refund the cost of the phone after they receive it.
• The process involves consumers taking complex steps in practice. According to Chinese media reports, Jingtaotao only accepts users with paid membership for its refund-only policy, entailing setup fees from RMB 188 to RMB 28,888. 
• The company argued that it was legitimate to lure consumers onto its site with the refund-only plan, as “the initial costs of e-commerce platforms are very high,” as quoted in local news outlet NBD.

Context: The “refund-only” policy is an after-sales service popularized by Pinduoduo in 2021 with the aim of encouraging merchants to improve product quality and service. Taobao, JD, and Douyin made the same move at the end of last year amid fierce competition in China’s e-commerce sector.