After the Chinese media crucified Internet travel company Ctrip.com (CTRP) last week for allegedly selling fake travel insurance policies online, the company announced over the weekend plans to throw CNY10 million at establishing an integrity service refund system to help alleviate these types of problems in the future.

The fund is a response to the insurance scandal unveiled last week and is expected to protect the interests of Ctrip.com's members and customers. Ctrip.com opened a similar fund in 2005 when it created a security fund for tourists whose travel experiences had been impacted by natural disasters.

A Chinese consumer surnamed Liang last week accused Ctrip.com of selling dubious air insurance policies online. Liang wanted Ctrip.com to make a public apology to him or pay him CNY800,000 in compensation for its selling of two insurance policies to him. The amount of compensation that Liang claims is reported to be the premium of the two combined insurance policies he bought from Ctrip.com. China's Criminal Law prescribes that any individual involved in insurance fraud of more than CNY2000 can receive up to life imprisonment as punishment.

This new Ctrip.com fund will be used to compensate tourists who have booked products or services through Ctrip.com and have had direct economic losses due to problems caused by Ctrip.com or its cooperative agents. Local Chinese media report that Fan Min, CEO of Ctrip.com, stated that the company welcomes supervision from its clients for its service. He hopes the fund will provide effective protection to consumers.

Ctrip.com at the same time has issued an official statement saying that Chinese media's portrayal of Liang's accusations have not been faithfully reported. There is yet no word from Liang on whether he has been compensated by Ctrip.com through this new fund or whether his problems have been solved.