Sam's Club store in Yizhuang area of Beijing Photo: Li Hao/GT

Walmart China has been fined 300,000 yuan ($47,218) for using default five-star ratings for products on the Sam's Club app. The Guangdong Administration for Market Regulation (GAMR) deemed that such false commercial publicity would deceive and mislead consumers.

Sam's Club found itself in hot water since it was exposed to have removed certain products from Northwest China's Xinjiang Uygur Autonomous Region in December. The business later claimed "it did not deliberately remove goods sourced from the Xinjiang region." 

But the anger it sparked among Chinese consumers led to significant cancellations of Sam's Club memberships across the country.

The topic "Sam's club app gives default five-star rating for products" went viral on Twitter-like Sina Weibo on Friday, and was viewed more than 200 million times as of 6 pm. 

"They should have been fined earlier. I found that every once in a while, bad reviews are deleted from Sam's Club app," Sina Weibo user "Weiaiweiyi" said.

Under a product named crispy kumquat on the Sam's Club app, it can be seen that a large number of bad reviews appeared from December 9, while the latest bad review prior to that was in April 2021.

"Please check Sam's Club for any other violations of laws and regulations," a Sina Weibo user wrote. And other users also encouraged market regulators to look into Sam's Club's food security, tax payment, and fire safety compliance.

A Sina Weibo user named "Charenbianliangwang" wrote that Walmart and Sam's Club should be punished. "And that's far from enough. I also think Sam's Club's app should be removed from the shelves for rectification."

The comment was echoed by another user Xiaoman, who said that the dividend of China's huge market has fed those foreign companies too much. Such a fine is only a token punishment. Companies like Sam's Club that have "stepped on the line" should be shut down for rectification.

Between October 13, 2020 and May 17, 2021, Walmart (China) Investment used the app of Sam's Club to sell goods online. When users failed to record an active comment on the products they purchased within a designated period, the background system of the app will automatically default to a five-star review, and add the rating into the evaluation system, which is displayed on the product page, according to an investigation conducted by the GAMR.

GAMR said this constitutes false commercial publicity for product evaluation that deceived and misled consumers.

According to the provisions of Article 20 of the Anti-Unfair Competition Law of the People's Republic of China, the law enforcement agency ordered Walmart China to stop the illegal act and imposed a fine of 300,000 yuan.

Walmart China was one of a number of firms to come under the competition law spotlight, with the GAMR stating that the case "has a good demonstration effect of interpreting law by case." Other cases included fresh food chain Qiandama.

Global Times