China’s market regulator calls out PDD Holdings for refund policy

China’s top markets watchdog on Wednesday called on PDD Holdings Inc. executives to address their refunds-first policy, which allows shoppers to claim refunds without returning purchased goods.

This practice has been criticised by small merchants for putting an unfair burden on them. While regulators have asked PDD to address the issue, they have not provided specific recommendations or banned the practice.

In Beijing, the focus was on PDD’s unique “refunds only” policy. PDD’s online store links small shops with Chinese consumers, withholding payments if merchants fail to meet customer expectations, such as late deliveries or product discrepancies.

PDD’s shares dropped 2.5 per cent in premarket trading, with Alibaba down 1.5 per cent and JD falling over three per cent. The protest reflected third-party sellers’ increasing frustration with PDD, accusing the company of pressuring them for revenue to fund an expensive global expansion.

PDD has stated that they are actively working on finding solutions with their merchants. Company representatives did not respond to messages seeking comment. The Ministry of Commerce and market watchdog did not respond to faxed requests for comment.

Attribution: Bloomberg

Subediting: Y.Yasser