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KFTC aims to protect rights and interests of consumers by making the legal system fit for digital transactions and emphasize prevention and relief of consumer damage in daily life

The Korea Fair Trade Commission (led by Chairperson Sungwook Joh, hereinafter referred to as the \"KFTC\") has prepared the general revision bill of the “Act on the Consumer Protection in Electronic Commerce, Etc.” (hereinafter referred to as the “Electronic Commerce Act”) and announced advance legislation notice, which is scheduled to be implemented for 40 days from March 5, 2021 to April 14, 2021.

Market changes such as rapid growth in online retail market and platform-centered reform of transaction structure driven by the accelerated development of digital economy and non-face-to-face transaction have continuously raised the need to revise the law.

So, to be more in line with the changed situation of electronic commerce, the bill will first modify the relevant terminology and system (mail order → electronic commerce). Various terms like mail order distributor and mail order broker will no longer be used, and electronic commerce businesses will be classified and defined as: 1) online platform operator, 2) online platform business user, and 3) business with its own website.

Secondly, it will improve safety and options for consumers engaging in electronic commerce. For instance, consumer safety in electronic commerce will be promoted through measures like the obligation to cooperate when issuing a recall of dangerous goods. Also, in order to provide consumers with the right to make rational choices, it will enhance the provision of information by distinguishing search results from advertisements, showing how ranking on results pages are determined, disclosing information on user reviews, specifying personalized ads, and giving options to choose non- personalized ads.

Thirdly, the bill will make online platform businesses in charge of major distribution channels take responsibility that suits their roles in the transaction process. According to the bill, platforms that both intermediate transactions and operate direct purchase transactions will distinguish and notify each type of transaction, and they will also indicate details of work* they perform in the transaction process.

* Registration of offer, receipt of payment, settlement, refund of payment, delivery, and etc.

In addition, the bill says that platform operators will take joint responsibility with business users in the following cases:

1) If the consumer misunderstands the platform operator as the party directly involved in the transaction since the operator used its name for indication, advertising, supply, and delivery of contract even when consumer damage has been caused by intent or negligence of the platform business user.
2) If consumer damage has been caused by intent and negligence of the platform operator when directly performing its key responsibilities for the transaction process, such as registration of offer, settlement, receipt of payment, and refund of payment.

Fourthly, the bill will improve utilization of the Temporary Suspension Order System and introduce measures like the Consent Resolution System and Electronic Commerce Dispute Mediation Committee for quick and effective consumer damage prevention and relief.

If the National Assembly passes the bill, it is expected that consumer damage frequently seen in everyday online transactions will be effectively prevented and relieved. Moreover, it is likely that this will also create conditions in which online platforms can compete, innovate, and grow to be considered as rational choices by consumers.

The FTC plans to submit the bill to the National Assembly after collecting enough opinions from relevant ministries and stakeholders during the advance legislation period.

*The Korean text of the documents is confirmed to be authentic and English version is only for reference

[E-Commerce Division, March 8, 2021]