The Purpose of the Consumer Protection in Electronic Commerce, etc. (the E-Commerce Act)
The purpose of this Act is to protect the rights and interests of consumers and establish a sound order in electronic commerce. The E-Commerce Act prescribes the duty of business entities to provide information to consumers, and consumers’ right to cancel an order.
The E-Commerce Act prescribes the obligations and prohibited conducts of mail order distributors and mail order brokerages.
The term "mail order" means the activity of selling goods, etc. upon consumers' orders after providing consumers with information on the sale of goods, etc. by non face-to-face means, such as telecommunications (including telephone). Examples: Internet shopping, TV home shopping, catalog shopping, adult shopping sites, online language institutes, and Internet games.
The Obligation and Prohibited Conducts of Mail Order Distributors
The E-Commerce Act stipulates the obligations of mail order distributors throughout the entire process of transaction. Mail order means selling goods or services by providing information on the sale of goods, etc. and receiving a consumer's order by means of mail, telecommunications (such as the Internet and telephone), and other.
Mail order distributors are prohibited from luring consumer, concluding a deal with consumers, or interfering with consumers’ cancellation of orders or termination of contracts, etc. by providing false or exaggerated information or by deceptive means.
The Obligation and Prohibited Conducts of Mail Order Brokerage Business Operators
Mail order brokerage means the act of intermediating a mail order between both parties to a transaction by allowing the use of a cybermall and other methods.
Mail order brokerage business operators shall ① notify beforehand that he/she is not a party to the mail order, ② provide the name, address, telephone number and other matters of the requester of mail order brokerage to consumers before the conclusion of an order, ③ take other necessary measures to resolve related complaints or disputes without delay.
Improving the system for e-commerce transactions
The KFTC has been amending the E-Commerce Act to promote compliance among e-commerce enterprisers and ensure transparent law enforcement against violators.
Imposing Corrective Measures and Sanctions Against the violations of the E-Commerce Act
Where a business entity violates the E-Commerce Act, such as interfering with consumers’ contract cancellation or luring consumers by deceptive means, the KFTC may issue a corrective order, order to publish the fact that the entity received a corrective order, or impose penalty surcharges, on the business entity. Also the KFTC may file a criminal charge against the business entity or its employees.
- Loot box-type items of major game companies
ㅇ The KFTC imposed a 25 million won administrative fine and a 984 million won penalty surcharges against Nexon, Netmarble, and NextFloor for selling loot box items through false, exaggerated, and deceptive means. The KFTC found that the three game makers have been selling loot box-type items by providing false information regarding the chances and periods of attaining certain items (Mar. 2018).
- In Nexon's case, the game maker offered such boxes through its “Celebrity Count” event in its game “Sudden Attack.” For every count purchased, each priced at 900 won, the firm would issue two puzzle pieces. Users who collected all 16 pieces would receive diverse benefits in the game.
- In promoting the puzzle event, Nexon informed users that the 16 pieces would be provided at random. In reality, however, the odds of obtaining some of the pieces was as low as 0.5 percent.
- By depriving users of this information, the KFTC decided that the game maker led ordinary users to believe that the odds of getting each puzzle piece would be equal, and lured consumers by providing this false or exaggerated information.
- Currently there is a global debate over whether loot boxes should be considered as gambling and become a subject of heavy regulation. The significance of this case is that the KFTC’s action has given a clear signal that the game makers have the responsibility to not mislead consumers with false or exaggerated labels and ads, especially when selling loot box items.
ㅇ Correction of violations by three accommodation information and reservation platform, Goodchoice, Yanolja, and Gohere (Apr. 2017).
- The KFTC discovered that the three accommodation platforms hid negative reviews and listing accommodations that paid for advertising on the top of the search results without disclosing that they have paid for the ranking.
Providing information and education programs related to e-commerce
Since the prevention of damage holds greater importance than ex post remedies in e-commerce, the KFTC has been providing relevant information and education programs to business entities and local governments.
- The KFTC issues booklets on the E-Commerce Act to educates local businesses, and educate relevant public officials regarding the latest market trends and corrective measures for law-violating businesses.
- The KFTC discloses a list of online marketplaces with frequent consumer complaints to help consumers to be aware of the potential violations of the E-Commerce Act.
- The KFTC operates the Cross Border Transaction Consumer Portal, through the KCA, to provide information on matters requiring caution in each step of the transaction and to disclose a list of overseas online marketplaces with frequent consumer complaints.