Fund companies rely on the advantages of App technology to force a change in dispute resolution methods. Court: Invalid!

Nowadays, it is becoming more and more convenient to use mobile phones to buy funds and check accounts. However, when consumers casually click "Agree and Sign", the small words on the screen may quietly change some agreements, including the method of resolving disputes.

When 83-year-old Ms. Fang wanted to redeem a fund product she purchased nine years ago, she discovered a cumulative loss of RMB 380,000. She sued the court for compensation. The fund company said that it had changed the dispute resolution method on the mobile application software App to "arbitration" and that it should not be resolved through litigation.

Is the fund company's forced change of dispute resolution method legally binding? The Supreme People's Court, the People's Bank of China, the State Financial Supervision and Administration Bureau, and the China Securities Regulatory Commission jointly issued typical cases and gave a negative answer.

Funds subscribed for millions of dollars

Redemption loss of 380,000 after 9 years

In December 2015, Ms. Fang, who was 74 years old at the time, subscribed for a fund product worth 1 million yuan through an offline recommendation by a fund company salesperson. This product continued to suffer losses. In December 2024, when Ms. Fang wanted to redeem it, she operated it through the mobile application software provided by the fund company.

Li Mengfei, assistant judge of the Financial Tribunal of Shanghai Hongkou District People's Court, said that when Ms. Fang redeemed through the fund company's app, it showed that the fund product she had invested 1 million yuan to subscribe for had accumulated losses of about 380,000 yuan over nine years. Ms. Fang believed that the staff of the fund company misled her into investing with false promises of "low risk, high returns", so she filed a lawsuit in court in September last year, demanding compensation from the fund company for losses.

Fund company:

App upgrade can only be arbitrated but not litigated

Before the case went to trial, the fund company first raised a "supervisor objection", saying that because the supervisor's objection in previous similar cases had not been supported by the court, they upgraded the system of the mobile application software and adjusted the dispute resolution terms. Disputes between the two parties must be arbitrated by an arbitration committee instead of going to court for litigation.

Evidence shows that the plaintiff logged into the upgraded App in October 2025 and checked online a series of service agreements containing arbitration clauses. Among them, the arbitration clause clearly applies to matters that occurred before and is highlighted in bold.

Yuan Yuan, a judge of the Financial Tribunal of the Shanghai Hongkou District People's Court who presided over the case, said that the defendant fund company believed that since Ms. Fang checked the "agree" box, the two parties had reached a valid arbitration agreement and the case should be transferred to an arbitration committee for arbitration.

Do not click "Agree and Sign"

Can't enter the app at all

Ms. Fang emphasized that when she purchased the fund product involved in the case, the two parties did not agree on a dispute resolution method. The defendant fund company canceled its offline offices around 2018, and the App on the mobile phone became the main channel for consumers to check product information and handle subscriptions and redemptions.

Yuan Yuan introduced that Ms. Fang said that she logged into the App involved in the case in preparation for the trial. At that time, the App had been upgraded, and she did not check "Agree and Sign". She could not even log in to the App, view product information, or prepare evidence. Ms. Fang believes that this cannot be used to conclude that she agrees to be bound by the arbitration clause.

Court: App’s forced arbitration is invalid

The court of first instance held that the arbitration of disputes should be based on the existence of a valid arbitration agreement between the parties. The defendant fund company provides users with a series of service agreements on the App. Although a pop-up window prompts reading and the arbitration clause is also prompted in bold, there are only two options on the page, "Agree and sign" and "Disagree and exit."

Yuan Yuan further introduced that users cannot continue to use the App if they do not agree. Even if they are just viewing fund product information, they must agree to the agreement before logging in. This signing method is mandatory, violates the principle of voluntary arbitration, and is not binding on the plaintiff. This case should be resolved through litigation. The first-instance ruling rejected the fund company’s executive objection.

The fund company was dissatisfied and appealed to the Shanghai Financial Court.

Yang Rengan, the judge of the Shanghai Financial Court's Filing Division who presided over the second instance of the case, said that according to Article 4 of my country's Arbitration Law, arbitration should be voluntary and reach an agreement between both parties.

In this case, acceptance of the arbitration clause was set as a prerequisite for logging in to the fund company's app. Users can only "agree" to use it. If they do not agree, they cannot perform any operations. Moreover, consumers can only solve all problems related to the fund products involved in the case through this app and have to choose "agree and sign." Such a setting is obviously against the legal principle of voluntariness, and the arbitration agreement formed will not be effective for investors. The court held that the first instance found the facts clearly and applied the law correctly. The second instance rejected the appeal and upheld the original ruling.

Supreme Court:

Technical advantages cannot override legal principles

Speaking of the typical significance of this case, Zhang Lijie, a second-grade senior judge of the Second Civil Division of the Supreme People's Court, emphasized that technical advantages cannot override legal principles. For an arbitration agreement to be valid, in addition to its external form, it must also be based on the true agreement of the parties. Taking advantage of technological advantages, financial institutions set the acceptance of arbitration as the login threshold for accessing existing information and forced changes to dispute resolution methods, which violates the principle of voluntariness of the parties and is not effective for investors. This case has exemplary significance in protecting financial consumers’ right to choose dispute resolution, and demonstrates the rigid protection of the principle of fairness and consumer rights in the digital financial era.

When a financial dispute arises, the parties can choose two resolution channels: arbitration and litigation. Litigation is final in two instances, open and transparent, and has many relief channels, but the cycle is long. Arbitration is final and is not open to public hearings. It is efficient, private, and has flexible procedures. The cost of arbitration is generally higher than that of litigation. Consumers are sometimes deterred by the arbitration fees and give up on defending their rights. Moreover, the decision is final and there may be no relief channels if the outcome is unfavorable.

Zhang Lijie advises investors and consumers to carefully read the relevant terms when faced with App pop-up prompts and not to click "Agree" hastily. At the same time, it is also recommended that financial institutions cannot use technological advantages to set up "pre-check boxes" and "forced consent" to deprive investors of their right to choose in a disguised way. They should protect investors' right to know and make independent choices in accordance with the law.

Producer丨Fan Xinzheng

Reviewer丨Chen Bingke

Reporter丨Sun Ying