[4] Compiled from: Red Star News
 
[2] Recently, Shanghai police cracked a suspected contract fraud case involving a total amount of up to 700 million yuan. Netizens discovered that renowned actress Ma Yili is the brand's endorser.

 

[3] On the 15th, Ma Yili issued a statement on Weibo regarding the suspected illegal activities of the endorsed brand Chazhilan. The statement said that upon receiving the police notification, she immediately notified the brand of contract termination. Ma Yili also stated that she would assist the defrauded franchisees in seeking justice.
 
 
Case review
[4] The brand Chazhilan, endorsed by Ma Yili and suspected of illegal activities, is a milk tea brand. Since the end of last year, Shanghai police received numerous reports from franchisees of this brand's milk tea shops. After extensive investigation, economic crimes were suspected, and on March 23 this year, a fraud ring led by suspects surnamed Jin and Wang was apprehended.

 

[5] Investigation revealed that the ring established a catering company and set up multiple fake websites for recruiting franchisees of well-known milk tea brands. They also forged authorization documents for multiple brands. Even during on-site inspections by franchisees, they hired people to pose as customers and queue repeatedly in front of milk tea shops to create an illusion of booming business, thereby defrauding franchise fees. Currently, police have dismantled multiple fake recruitment websites, arrested over 90 suspects, with the involved amount exceeding 700 million yuan.
 
[6] During the investigation, police found that the criminal ring hired people to pose as customers at a daily rate of 40 to 80 yuan per person, queuing repeatedly in front of milk tea shops to attract franchisees. After franchisees paid the franchise fees, the ring performed poorly by delaying store location selection, randomly picking locations by flipping through maps, inflating renovation and procurement quotes, and supplying substandard ingredients, directly leading to poor business performance or even closure of many franchise stores.
 
Victim Ms. Gao recalled that after an on-site inspection in Shanghai in May 2020, she paid a 100,000 yuan franchise fee for the "Chazhilan" milk tea brand. However, after payment, the promised comprehensive supporting services were not fulfilled—no store location was found for her, no training was provided, and she was only given a stack of milk tea recipe ratio materials, leaving her to figure things out on her own. Three months after opening, Ms. Gao's shop had dismal business and had to close down. Angry, Ms. Gao approached the company for an explanation, but the company dismissed her, citing poor management on her part.

 

[2] Several franchisees said their shops were still operating, but they were shocked to learn that the brand owner was suspected of committing a crime and didn't know how to resolve the situation. A franchisee of "Chazhilan" in Nanchang said he joined in November last year, specifically visiting Shanghai for an inspection and feeling the business was doing well. After paying a 120,000 yuan franchise fee, many of the company's promises were not fulfilled. Now, he has invested over 300,000 yuan in total, and business is very poor. "I'm losing money every day, and this incident makes things even worse. I don't know what to do."
 
 
《[3] Advertising Law》
[4] Article 56
[5] If an advertising endorser knowingly or should have known that the advertisement is false, yet still designs, produces, acts as an agent, publishes, or recommends or certifies it, they shall bear joint and several liability with the advertiser.
 
[6] Article 61
If an advertising endorser recommends or proves a product they have not used or a service they have not received; or if they knowingly or should have known that the advertisement is false but still recommend or prove the product or service in the advertisement, the market supervision and administration department shall confiscate the illegal income and impose a fine of not less than one time but not more than two times the illegal income.
 
 
[1] The author's perspective
However, in reality, there are few cases where advertising endorsers bear responsibility for this. One core reason is that the two main bases for an endorser's liability include knowing or should have known that the advertisement is false and recommending a product they have not used or a service they have not received. In practice, most celebrities have professional legal teams providing legal services, and when accepting advertisements, the team generally helps the celebrity avoid certain legal risks.
 
Taking this case as an example, if there is relevant evidence to prove that Ma Yili knew that the Chazhilan brand was engaging in contract fraud and still endorsed it, as an endorser, Ma Yili's behavior would constitute aiding and abetting, potentially involving joint criminal liability. However, in reality, this possibility is not high.
 
Nevertheless, based on information disclosed by the media, the Chazhilan brand was established purely for fraud, with its business being entirely fraudulent and involving almost no normal business activities. Therefore, all fraudulent funds of Chazhilan are illegal proceeds and should be recovered according to law. Regardless of whether the advertising endorser fulfilled their review obligations, their endorsement fees should be recovered through the asset recovery process and used for compensation to the victims.