Internet Finance: Countermeasures and Ways to Defend Consumer Rights and Interests

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The rapid development of the Internet and financial technology has injected fresh vitality into the traditional financial industry, improved the efficiency and convenience of financial transactions, and reduced transaction costs, but it also brought many risks and challenges, threatening the legitimate rights and interests of consumers. The "3.15" party in 2009 also paid more and more attention to the protection of the rights and interests of Internet financial consumers.

1

Current Situation of Protection of Consumer Rights and Interests of Internet Finance in China

While China's Internet finance industry is developing steadily, its business model is constantly innovating. Internet finance is an innovative financial model that integrates with the traditional financial industry based on modern technologies such as the Internet and information technology. Compared with the traditional financial industry, Internet finance has symptoms such as lower transaction costs, higher investment and financing efficiency, wider coverage, and higher risk levels. With the popularization of the Internet and mobile phones, the availability of financial tools has increased, and residents' willingness to participate in Internet financial consumption and investment has continued to increase.

2013 was called the first year of Internet finance. Since then, various Internet financial business models such as third-party payment, online credit, crowdfunding financing, electronic money and supply chain finance have flourished. First of all, the third-party payment is developing rapidly. The third-party service organization facilitates the transaction between the two parties through cooperation with UnionPay or the bank, and realizes the transfer and payment of funds. It has the advantages of real-time, cross-regional, low-cost, etc. The main company representatives are Alipay and Tenpay. Secondly, online loan financing methods are becoming more and more common. While the P2P online loan industry is consolidating, the scale still maintains a steady growth, which is conducive to the financing and operation development of small and micro enterprises. Third, the Internet insurance business has achieved rapid expansion, innovative and diversified development, such as ZhongAn Insurance and Taikang Online. Finally, Internet fund sales have grown steadily, currency fund sales have become the main business, and residents' wealth management has become more convenient.

According to the data from the National Bureau of Statistics, the balance of RMB inclusive finance loans at the end of 2021 was 26.5 trillion yuan, an increase of 5 trillion yuan. The accumulated funds raised by A-shares on the Shanghai and Shenzhen Stock Exchanges throughout the year were 1,674.3 billion yuan, an increase of 132.6 billion yuan over the previous year. The momentum is good. At the same time, the risk rectification work of the Internet finance industry has been carried out in depth, the risk level has been further reduced, and the industry standardization has been strengthened. According to the "China Internet Finance Annual Report 2020" released by the China Internet Finance Association, the online payment industry continued to develop steadily in 2019, the risk of individual online lending continued to converge, and the scale of Internet insurance premiums increased significantly.

The strengthening of consumer rights protection has driven the growth of Internet financial consumption. In recent years, China has continuously improved the relevant systems for the protection of consumer rights and interests, and strengthened the supervision of Internet finance and financial technology. and other departments jointly issued the "Approval Methods for the Illegal Collection and Use of Personal Information by Apps", which has further rectified and standardized the industry ecology. The vigorous development of Internet finance and the introduction of national policies have greatly promoted consumers' consumption of Internet finance.

From the point of view of the transaction stage, when consumers choose and make purchase decisions, the Internet financial platform accurately describes the match based on consumer information, provides them with true and detailed explanations of products and services, and promises openness, transparency and timely information disclosure. Consumer perception The risk of purchase is relatively low, and the enthusiasm for purchase increases, which improves consumers’ purchase willingness and satisfaction. At the same time, it may also have a scope effect – recommending or attracting other consumers to participate in transactions, thus promoting Internet financial consumption. When consumer disputes and consumer complaints occur, enterprises insist on safeguarding the legitimate rights and interests of consumers, take effective remedial measures, try their best to restore consumer losses, improve corporate image and consumer psychological expectations, and form user stickiness and dependence. Positive impact on subsequent re-consumption.

From the perspective of the subjects involved, the protection of consumer rights and interests is not only related to Internet financial platforms and consumers. Government departments, social organizations and legislative bodies are also the core subjects of consumer rights protection. Rights and obligations, government law enforcement departments supervise the quality and credit level of enterprise products and services, and consumer protection associations conduct industry self-discipline, etc. These are conducive to the expansion of the overall consumption scale of the Internet finance industry and the optimization of the industry transaction environment.

2

Problems Existing in the Protection of Internet Financial Consumer Rights and Interests

The development of Internet financial products and services has profoundly affected and changed the consumption methods and payment methods of the general public, but at the same time, the disclosure of users’ private information, false inductive propaganda, mismanagement of funds, default of funds, and overdue time limit for claim settlement violate consumers’ right to know, fairness, etc. The phenomenon of legal rights and interests such as transaction rights and privacy rights emerge in an endless stream. Internet financial consumers are often in a weak position in the face of financial platforms, and their legal rights and interests have not been effectively protected. The main problems include the following aspects:

The consumer rights protection system is not sound enough - there is no legal system that clearly protects Internet finance consumers in the existing laws and regulations, and the Consumer Rights Protection Law cannot specifically solve problems such as civil and commercial disputes in the Internet finance field. The operability is not strong, and there are many omissions and deficiencies. In addition, the legal system related to traditional financial consumers is not very applicable. As a new financial model, Internet finance has greatly changed its consumption subjects and methods, which cannot be effective. Protect the legitimate rights and interests of consumers. The scope of the regulatory system introduced is also narrow, mainly for departmental regulatory documents for a specific financial matter or sub-sector, such as the "Internet Insurance Business Supervision Measures" issued by the China Banking and Insurance Regulatory Commission in 2020, which lacks systematic and comprehensive supervision. system.

Market supervision is not strong, and industry self-discipline is not fully exerted—industry organizations such as the Internet Finance Association and Consumer Rights Protection Association have failed to fully play their role in self-discipline management. Industry infrastructure and credit systems need to be built. The degree of norms and standards in formulation and product pricing is relatively low, an effective dispute resolution mechanism has not been established within the industry, the credit system of individuals and enterprises is not sound, and the platform has not assessed consumers’ risk appetite and tolerance, resulting in higher credit risk.

Internet finance companies do not have enough sense of responsibility - companies must not only protect the interests of internal stakeholders such as shareholders and investors, but also protect the legitimate rights and interests of consumers, thereby increasing corporate profits and enhancing competitiveness. In the field of Internet finance, corporate social responsibility is mainly reflected in the protection of the rights and interests of financial consumers, which is a moral responsibility beyond the legal system.

In terms of the right to know, there is information asymmetry and unequal status between companies and consumers. In order to pursue their own interests, platform companies make full use of their own information advantages, conceal the real risks of products or exaggerate the expected benefits of products, and do not conduct easy-to-follow business transactions with consumers. Understandable explanations and risk warnings. Insufficient information disclosure and lack of unified norms and standards lead consumers to make wrong judgments; in terms of the right to fair trade and the right to choose independently, Internet financial platforms use various unequal standard terms when conducting transactions, adding exemption clauses or undertaking Less responsibilities and obligations deprive consumers of their right to choose and identify themselves; in terms of privacy, platforms such as third-party payment, online lending platforms, and online wealth management product sales risk revealing important consumer privacy information, such as registered names , phone number, ID card number, risk preference and transaction information, etc. Once these information fall into the hands of criminals, it will bring huge losses and harm to consumers; in terms of property security rights, due to the barriers to entry in the Internet financial industry Low, good and bad companies are mixed, some platforms go bankrupt or lose money due to poor management, resulting in damage to consumers' property and no legal compensation.

3

Strengthen the protection of consumer rights and interests and promote Internet financial consumption

Improve the Internet finance consumer rights protection system - first, revise the existing "Consumer Rights Protection Law" and other systems to clarify the rights and interests of Internet finance consumers; Third, pay attention to learning from the advanced experience of other countries, keep pace with the times, improve the consumer rights protection system and dispute resolution mechanism in a timely manner, and reduce the difficulty and cost of rights protection.

Improve the Internet financial supervision system and intensify supervision - first, promote the coordination and cooperation of various supervision departments, give full play to the positive role of "consumer associations", learn from and introduce innovative supervision tools such as "supervision sandbox", and build a big data platform to collect Internet financial enterprise operation information and data, and comprehensively supervise the operation of Internet financial platforms; secondly, enhance consumers' self-rights protection concept and awareness, and unblock rights protection channels; finally, establish a corporate credit evaluation system, and select indicators that reflect the corporate credit level for comprehensive rating. Set up reward and punishment mechanisms to urge enterprises to implement social responsibilities and improve their credit ratings.

Enhancing corporate responsibility awareness and forming a long-term mechanism - Enhancing corporate responsibility awareness will help to form a long-term mechanism to promote consumer protection and industry development. On the one hand, subject to the rules and regulations of government departments and relevant laws and regulations, the awareness of social responsibility of Internet financial platforms is enhanced, which is conducive to the improvement of the protection mechanism of consumers’ rights and interests within enterprises; While the rights and interests of consumers are protected, the reputation and image of the enterprise will be improved accordingly, the willingness of consumers to purchase will also increase, the enterprise will achieve survival and development, and the motivation to fulfill its social responsibility will be further increased. First, enterprises should take the initiative to assume social responsibilities, actively protect consumers’ rights and interests, and establish a trustworthy and responsible corporate image; secondly, establish and improve service systems, improve consumer complaints and opinion handling mechanisms, consciously accept consumer supervision and feedback, and improve consumer awareness. Satisfaction level; thirdly, strengthen the construction of enterprise self-discipline, implement an effective information disclosure system, solve the problem of information asymmetry between Internet financial platforms and consumers, and implement open and transparent management; Consumer transaction information, data leakage, and take corresponding regulatory measures to protect the personal and property safety of consumers.

Text / Hou Yinxia Ye Tingjun (The author Hou Yinxia is an associate professor and doctor of the School of Humanities, Social Sciences and Law, Harbin Institute of Technology; Ye Tingjun is a graduate student)

This article was published in "" 2022-04