China’s livestream industry has been booming in recent years, with internet celebrities leveraging their influence to sell products directly to consumers through live online shows. However, a new investigation has revealed a darker side to this lucrative industry, with many influencers engaging in fraudulent practices that harm both brands and consumers.
Fraudulent Practices in the Livestream Industry
According to a report by state-owned media outlet Legal Daily, complaints about fraud in the livestream e-commerce sector are on the rise. Livestreamers are using a variety of deceptive tactics to boost their sales figures and attract customers. Consumers have reported receiving shoddy or counterfeit goods, while brands have accused livestreamers of inflating sales data to earn higher commissions.
One consumer recounted a particularly egregious example of fraud, where a livestreamer claimed to have sold over 999 items in a day, when in reality, only a few dozen were sold. Merchants have also raised concerns about the high number of canceled orders they receive after a livestream, indicating potential manipulation of sales figures by influencers.
Industry insiders have highlighted the prevalence of these fraudulent practices in the livestream space, calling for stricter penalties for those found to be engaging in deceitful behavior. Brands are especially vulnerable to losses from livestream scams, with one company reportedly paying a celebrity 100,000 yuan for a promotional livestream that resulted in only one sale.
The Rise of Fraudulent Services
Legal Daily’s investigation also uncovered the existence of an entire industry dedicated to helping livestreamers artificially inflate their sales figures. These companies market themselves as “promotion services” and offer services such as fake followers, comments, and shares to boost engagement during livestreams. Individuals can earn money by posting fake comments on behalf of these companies, further perpetuating the cycle of deception.
Online stores selling fake engagement metrics, such as likes and views, have also proliferated in the livestream industry. These services allow influencers to meet sales quotas set by brands by artificially inflating their numbers. Despite contractual clauses prohibiting order padding, influencers continue to engage in fraudulent practices to meet their targets and secure lucrative deals.
Regulatory Efforts to Combat Fraud
Chinese regulators have taken steps to address the issue of fraud in the livestream industry, implementing measures to crack down on false advertising and misleading practices. In April, the Central Cyberspace Affairs Commission launched a nationwide crackdown targeting artificially inflated product sales, while a notice issued in July addressed fake and inappropriate content in livestreams.
The authorities have specifically targeted practices such as creating fabricated scenarios and identities for promotional purposes and misleading consumers through the sale of counterfeit or substandard goods. These efforts aim to protect both consumers and brands from falling victim to fraudulent practices in the livestream e-commerce sector.
Despite regulatory interventions, challenges persist in policing the livestream industry and holding influencers accountable for fraudulent behavior. Consumers like He Yuming, a college student in Shanghai, have shared their experiences of encountering subpar products and counterfeit goods while shopping via livestream channels.
He recounted purchasing a winter coat that appeared thick and warm during a livestream, only to receive a thinly padded and inferior quality product. Additionally, she highlighted instances where livestreamers sold a mix of authentic and counterfeit goods, leading to discrepancies in product quality and consumer trust.
In conclusion, the prevalence of fraud in China’s livestream industry poses significant risks to both brands and consumers. As the sector continues to grow and evolve, regulatory bodies and industry stakeholders must work together to address fraudulent practices and uphold integrity in e-commerce transactions. By fostering transparency and accountability, the livestream industry can maintain its momentum while safeguarding the interests of all parties involved.