Market Regulators Fine Online Tutoring Giants Zuoyebang and Yuanfudao for Misleading Consumers

The Beijing Municipal Bureau of Market Supervision and Administration on Monday imposed the maximum possible penalty on online education platforms Zuoyebang and Yuanfudao for unfair competition and misleading consumers.

The investigation showed Alibaba-backed Zuoyebang and Tencent-backed Yuanfudao fabricated information about their teachers’ work experience, falsified user reviews, and gave misleading details about their services in order to boost orders. On its website Zuoyebang even fraudulently claimed to be a partner of the United Nations, according to the authorities.

Both firms were also found to be using misleading pricing. A promotional campaign on Zuoyebang’s app and its official stores on Tmall and JD.com offered a 21% discount on online courses for a limited time. Yuanfudao also misled customers with discounts, offering package courses worth 399 yuan ($62) for 9 yuan ($1.48). Investigations showed that no transactions at these prices had ever been recorded, in violation of the Price Law and Law against Unfair Competition.

Facing penalties of 2.5 million yuan ($389,000), the two tutoring giants conducted self-reviews on their products and removed all the improper marketing banners.

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“We sincerely accept and completely obey this penalty result, and are committed to conducting the overhaul for related unqualified promotional contents and pricing. In the future, we will also strictly comply with relevant laws and regulations, optimize business processes to serve customers.” Zuoyebang said in a statement on Monday.

“Adhering to the goal of improving learning efficiency, Yuanfudao will earnestly fulfill its social responsibilities, standardize its business processes and norms to provide users with high-quality products and services,” Yuanfudao noted in a statement.

Chinese authorities have made great efforts to regulate out-of-school training platforms. Last month, Beijing local regulators fined four education agencies – including GSX and Koolearn – 500,000 yuan each ($77,000) for misleading customers with false advertising and pricing, reported Reuters.

The State Administration of Market Regulation claims it will strengthen the crackdown on after-school education institutions in order to standardize market operations and safeguard people’s legitimate rights.