If members pay more than non-members, is that unlawful?

What the clause prohibits is unreasonable differential treatment in transaction conditions based on characteristics such as consumer preferences or transaction habits. Whether a price is reasonable needs case-by-case analysis; write the rule down so it can be explained externally.

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Algorithmic recommendation and filing

Does Algorithmic Price Discrimination Break the Rules?

Basis: Provisions on the Administration of Algorithmic Recommendation of Internet Information Services (互联网信息服务算法推荐管理规定)

Conclusion: When selling goods or providing services to consumers, a provider may not, based on characteristics such as the consumer's preferences or transaction habits, use algorithms to apply unreasonable differential treatment in transaction conditions such as the transaction price, or engage in other unlawful conduct. In other words, using algorithms to treat people differently on price and similar conditions is expressly prohibited.

What you may need to do

Check whether price differences based on user preferences or transaction habits exist
Write the discount rules as a position you can explain externally
Review marketing, coupon-issuing and pricing algorithms periodically and keep records
Explain in the user agreement or campaign rules the conditions under which differentiated discounts apply

Clause basis

Provisions on the Administration of Algorithmic Recommendation of Internet Information Services, Article 21
Where an algorithmic recommendation service provider sells goods or provides services to consumers, it shall protect the consumer's right to fair dealing, and may not, based on characteristics such as the consumer's preferences or transaction habits, use algorithms to apply unreasonable differential treatment in transaction conditions such as the transaction price, or engage in other unlawful conduct.

Provisions on the Administration of Algorithmic Recommendation of Internet Information Services, Article 32
Where an algorithmic recommendation service provider violates Article 6, Article 9 paragraph 2, Article 11, Article 13, Article 15, Article 18, Article 19, Article 20, Article 21, Article 27 or Article 28 paragraph 2 of these Provisions, the cyberspace administration departments together with the relevant departments for telecommunications, public security, market regulation and so on sh…

One-line conclusion

When selling goods or providing services to consumers, using algorithms to apply unreasonable differential treatment in transaction conditions such as the transaction price on the basis of the consumer's preferences, transaction habits and similar characteristics is expressly prohibited. "Big-data price discrimination against regular customers" is not a grey area.

Basis

Article 21 is the direct clause on this question: where an algorithmic recommendation service provider sells goods or provides services to consumers, it shall protect the consumer's right to fair dealing, and may not, based on characteristics such as the consumer's preferences or transaction habits, use algorithms to apply unreasonable differential treatment in transaction conditions such as the transaction price, or engage in other unlawful conduct.

Article 32 lists Article 21 among the responsibility-linkage clauses: a breach of Article 21 is handled by the cyberspace administration departments together with the relevant departments for telecommunications, public security, market regulation and others according to their duties and under the relevant laws, administrative regulations and departmental rules. That is, the penalty route for this article refers out to the existing rules on pricing and consumer rights protection rather than staying inside this regulation itself.

What needs to be distinguished is reasonable differentiated operation and the differential treatment the clause expressly prohibits: public discounts aimed at different scenarios or different channels usually have an explainable commercial logic, whereas covert unreasonable distinctions in transaction conditions based on an individual user's characteristics are exactly what this article targets. The core of the boundary is whether it turns on individual characteristics, whether it is unreasonable, and whether it can be explained externally.

What you need to do

Check whether hidden price differences based on individual characteristics exist in pricing, coupon issuing or recommended bundles.
Turn the discount rules into a written position you can explain externally, with the trigger conditions made clear.
Review pricing-related algorithms periodically and record the review conclusion and the person responsible.
When a user complains about a price difference, give a clear reply through the appeal and complaint channel under Article 22.
Run past legal any marketing copy involving cross-platform price comparison or member versus non-member price gaps.

Common pitfalls

Treating "new customer coupons" and "returning customer coupons" as absolutely safe, when in fact, if the issuing logic depends on an individual user's transaction habits and cannot be explained, it can still be found to be unreasonable differential treatment. Raising prices for some users under the name of "random testing". Understanding differential treatment as being only about price and ignoring distinctions in other transaction conditions such as delivery, returns and after-sales service. Failing to explain the rules promptly after a complaint comes in, and instead dragging out the response time.

Common follow-up questions

This article targets the scenario of selling goods or providing services to consumers; whether wholesale pricing aimed at businesses falls under it too needs to be judged by the nature of the transaction, and when in doubt the local cyberspace administration's position governs.

Common follow-up questions

If members pay more than non-members, is that unlawful?: What the clause prohibits is unreasonable differential treatment in transaction conditions based on characteristics such as consumer preferences or transaction habits. Whether a price is reasonable needs case-by-case analysis; write the rule down so it can be explained externally.
Who penalises a breach of Article 21?: Article 32 provides that the cyberspace administration departments together with the relevant departments for telecommunications, public security, market regulation and others handle it according to their duties and under the relevant laws, administrative regulations and departmental rules.

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