Editor’s Note: Author of the article is Liu Chunquan, partner of Shanghai Duan&Duan Law Firm. It offers the interpretation of online tipping or donation under the current legal framework in China from a lawyer’s perspective. The topic evolves around the tipping incident last month via Wechat.
Last month, a Wechat article about a father begging help for his leukemia daughter were reposted so much that the “tip” feature of Wechat was found buggy. Over 2 million RMB was tipped the writer, or the father, which was way over the design parameter, 50,000 RMB at most. The bug was not difficult to understand. And the hospital that hosted the little girl soon published a detailed document on medical expense and the redemption provided by insurance. The donation money resulted from the bug is a legal topic worthy of discussion and a benchmark to test humanity and public network conduct management. With the intervention of Shenzhen Municipal Civil Affairs Bureau and Tencent Company, the two receivers agree to refund the donation to their original donors. The case may be closed but the issues with electronic payments rules still remain unresolved.
Does the donation money belong to the account holder from a legal perspective?
The 2 million+ tips are now sitting in the Wechat account of the author, is he the rightful owner of the money? In this case, the dust settles down as the receiver agrees to refund the tips but what if the account holder denies doing so next time? Then it has to be dealt with in accordance with the law, which requires analysis the legal relationship. This involves a question that I raised during the e-commerce research, what the legal nature of electronic payment instruction is? I personally advocate the payment of electronic payment instruction is a electromagnetic signal instruction, rather than the funds themselves. The electronic payment instructions of banks are not exactly the same. They could be funds aside from electromagnetic payment instruction as fiat are virtual realization of precious metals like gold or silver while electronic payment instruction are virtual realization of fiats. Therefore electronic payment instructions should be similar to the relationship between bank bills and paper money. It is the symbol of funds, but not the funds themselves. However, some non-bank payment processors insist on advocating payment instructions as the funds themselves, if not so determined, the public may lose trust on them.
Among the 500 proposals on e-commerce legislation that the authority has received so far, there isn’t a single one to discuss the issue. However, this is a very important and fundamental legal issue. I have been researching on this for years but failed to raise public awareness due to the lack of proper timing. I learned that the PBOC are doing some relevant research and I wonder what is their conclusion on the difference and connection between “money digitalization(instruction)” ( like inter-banking settlement instruction) and the database of “digital currency”?
From my academic view, in the aforementioned Wechat tipping incident users gives tipping instruction via Wechat instead of the money itself. Settlement happening between the user and Wechat is the real instruction processing. Settlement between payment processor and banks are funds settlement. From a legal point of view, the Wechat user receives the instructions instead of real money. He needs to withdraw the balance to the bank account to get cash. The flowchart of product design actually confirmed my viewpoint, that the payment instruction is not funds. Therefore, Wechat Company may deal with the funds that cross their product design without violation of their property rights.
And if the law defines the payment instruction as the money, then the money in the writer’s account will be the property he owns. Because money is a material and tipping on Wechat is defined as donation. Once the ownership changed, the right of property is changed. A refund will require the owner’s negotiation or legal proceedings.
That is not to say that the payment processor can do whatever they want. The payment instruction is a electronic contract that is fulfilled in real time. Because such instructions can quickly generate subsequent transactions or derivatives, generally they cannot be revoked unless there is no subsequent transaction or derivative action. For example, once receipt of telecom-scammed money is confirmed, criminals usually split them into multiple accounts for cash withdrawal or buying virtual products. In stock exchange, once a transaction order is executed, price chart will change and subsequent trade will happen. In these circumstances, instructions cannot be revoked by judicial proceedings. Revocable instructions are those who were executed after being released, or unsettled receipt of money, or money that is revocable as per authority regulation (for example, recently PBOC rules that money transfer via ATM could be revoked, or financial institutions may settle their own business modes). These instructions could be revoked after legal proceedings.
That’s not to say that there is no solution to the problem under the exiting legal framework. Wechat tipping or donation are products of a company, as long as these products falls within contract terms and they are not against the law, they should be effective. A country’s legal system should respect the authority that Company has under its rules. Can we ask for restitution of original state in the absence of rules on the ground of software bugs? I believe that such incident could rise in the future and some day we have to solve the question.
I personally think that’s viable but the Wechat and other companies need to improve terms of service and product rules, specifying that in similar situation, the Company may freeze relevant property. If refunding negotiation fails, then arbitration or court filing will be needed to determine the ownership, and then software may resume normal operation.
Of course, according to the payment business management rules of central bank, a payment refunding instruction shall be executed by returning money to its previous owner. It’s reasonable from a technical level, and regulatory requirement from current network payment business.

Original Post here.