Major Chinese ecommerce platforms including Taobao, JD.com, Pinduoduo, Douyin, and Kuaishou are rolling back their “refund-only” policies in response to mounting merchant complaints and widespread abuse.

The policy allowed buyers to receive full refunds without returning products, which is a move intended to simplify after-sales service. But it quickly became a loophole exploited by fraudulent customers. A 2024 industry report found that 99% of more than 2,000 surveyed merchants had encountered refund-only abuse, with nearly 8% saying such cases accounted for 80% of their post-sale disputes.

In response, platforms are updating their rules to give merchants more control over refund approvals, limiting platform intervention to specific cases.

JD.com has already removed the term “refund-only” from its after-sales interface. Meanwhile, Taobao and Pinduoduo now require sellers to address refund requests before platform intervention. These changes are still under consultation across most platforms.

While the exact wording of each platform’s new policy varies, industry observers say the direction is clear: ecommerce players are seeking a better balance between buyer protection and merchant rights, while pushing back against a race to the bottom in quality and price.

🔗 Source: Sina

🧠 Food for thought

1️⃣ E-commerce return abuse creates unsustainable costs across global markets

The policy shift by Chinese platforms reflects a global recognition that excessive returns significantly impact profitability.

Return fraud costs retailers approximately $15.9 billion annually, with various forms of abuse reported across markets 1.

This problem is particularly acute in e-commerce, where return rates typically reach 20-30% compared to just 8-10% for brick-and-mortar stores 2.

The Chinese industry report finding that 99% of surveyed merchants encountered refund-only abuse aligns with global patterns, where a small minority of customers often account for disproportionate return volumes.

Research indicates that even modest reductions in return rates can improve net margins by 200 basis points, explaining why platforms worldwide are reconsidering overly generous policies 2.

These financial pressures have pushed retailers across multiple markets to implement stricter return policies, as seen with LL Bean’s 2018 policy tightening and Amazon’s practice of monitoring and potentially banning accounts with excessive returns 3.

2️⃣ Finding balance between fraud prevention and customer satisfaction

The near-even split in consumer sentiment on Douyin’s poll reflects the universal tension between customer convenience and retailer protection.