China's State Administration of Market Regulation and Ministry of Commerce ordered PDD Holdings or Pinduoduo, which owns online retailer Temu, to fix its refunds-first policy, Bloomberg News reported Wednesday.

The market watchdog said PDD's policy that lets shoppers claim refunds without returning purchased goods is placing an unfair burden on small merchants, the report cited sources as saying.

While the regulator told PDD to fix the issue, it neither gave suggestions nor outlawed the practice, Bloomberg wrote.