Chinese web firms 'bullying' customers with data, algorithms - consumer watchdog

BEIJING/SHANGHAI (Reuters) - Chinese internet companies have been violating customers' rights by misusing personal data and "bullying" people into purchases and promotions, a government-backed consumer association said on Thursday.

The statement from the China Consumers Association (CCA) did not name any companies, but comes as Beijing has ramped up scrutiny of technology giants, reversing a once laissez-faire approach towards its vast internet space.

"Consumers are being squeezed by data algorithms and becoming the targets of technical bullying," the association said.

Companies must stop using systems to scan through consumers' personal data and offer them different prices for goods based on that information, the association said.

Algorithms that checked people's internet use and other data, then sent them targeted ads and promotions, deprived customers of choice, it added.

Some of the products and services promoted by these automated systems "violated the law and public order and good customs" it said, without going into further detail.

Consumers' "values and moral concepts may even be distorted by algorithms and become 'playthings' in the hands of platform operators," the CCA's statement said.

Beijing issued draft rules in December aimed at preventing monopolistic behaviour by internet companies, marking China's first serious regulatory move against the sector.

China also warned its internet giants to brace for increased scrutiny, as it slapped fines and announced investigations into deals involving Alibaba (NYSE:BABA) Group and Tencent Holdings (OTC:TCEHY).

Chinese state media have become increasingly vocal about infringement of consumer rights by tech companies.

In September, the state broadcaster published the results of a poll which showed that 75% of respondents believed they had been treated unfairly when they made purchases online.