Chinese court rules AI-generated product images in online sale constitute fraud
A Chinese court ruled that a clothing merchant committed fraud by using AI-generated images in online product listings that significantly differed from actual items and falsely claiming images were real photographs. The court ordered three-fold damages, establishing that merchants must disclose AI-generated content and ensure it accurately reflects products.
What happened
A customer surnamed Zhong purchased two women's tops from a clothing company through an online shopping platform for 411 yuan. Before purchase, Zhong asked the merchant whether the images showed real product photos and models, and the merchant stated 'all images in our shop are real product photographs' and provided model height, weight, and size information.
Upon receipt, Zhong found the actual items differed significantly from the advertised images in pattern, fit, and style. Investigation revealed all product images were AI-generated with no actual product photos, and the product detail pages contained no disclosure, warning, or indication that images were AI-generated.
Zhong sued for return of goods, refund, and three-fold damages for fraud.
Reported impact
The consumer received clothing that did not match the advertised images, leading to a false purchase decision based on misleading AI-generated representations.
Index analysis
On 12 March 2026, the Guangzhou Intermediate People's Court ruled that the merchant's use of AI-generated images that significantly differed from actual products, combined with false statements when directly questioned by the consumer, constituted intentional fraud.
The court established that merchants have an obligation to review AI-generated content used in marketing, ensure information accurately reflects actual conditions, and disclose when images are AI-generated. The court found that concealing AI generation while claiming images were real product photographs violated consumer protection laws.
Governance controls
The court clarified that under China's Electronic Commerce Law and Consumer Protection Law, merchants must disclose product information truthfully and accurately. Merchants bear responsibility for ensuring AI-generated promotional content objectively and accurately reflects actual goods.
The judgment established that technology may be used to enhance or display products, but merchants must provide necessary disclosure and explanation to consumers and not exceed standards of fidelity. The ruling provides clear behavioral guidance to merchants on lawful use of AI technology.
Classification
Sources and evidence
This record was researched and written by the Index, based on the following original reporting.