S. Korea Orders E-commerce Platforms to Revise Unfair Terms

The Fair Trade Commission (KFTC) has taken decisive action against major e-commerce players like Coupang, Naver, and others, mandating significant revisions to their user agreements. This move addresses long-standing issues of unfair contract terms that have placed undue burdens on consumers and sellers. The KFTC's scrutiny focused on clauses that improperly absolved platforms of responsibility, particularly concerning data breaches and financial transactions, signaling a stronger stance on consumer protection in the digital marketplace.

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The company is not responsible for any damages arising from third-party illegal access to the server or illegal use of the server.

A key point of contention was the handling of personal information. Following a major data leak incident involving Coupang, the KFTC has now ensured that platforms cannot simply disclaim all liability for damages arising from unauthorized access or misuse of user data. This revision directly tackles clauses that previously shifted security risks entirely onto users, a practice deemed fundamentally unfair. Similarly, other platforms like Naver and Gmarket faced similar corrections regarding their data protection clauses.

Furthermore, the KFTC has rectified problematic clauses related to user funds and platform responsibilities. Coupang's previous practice of forfeiting both free and paid digital currency upon account closure has been corrected, with the KFTC emphasizing that paid currency constitutes user property and cannot be arbitrarily nullified. The commission also targeted clauses that allowed platforms to unilaterally alter service payment methods without user consent. In terms of intermediary roles, platforms like Naver and Kurly were instructed to revise terms that exempted them from responsibilities related to transaction security and service outcomes, ensuring they bear a more appropriate share of the liability.

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Paid cash is property acquired by the user at a cost, and it is extremely unfair to extinguish it without a refund process.

This comprehensive review by the KFTC underscores a commitment to fostering a fairer online trading environment. By compelling these dominant platforms to amend their terms, the commission aims to prevent the exploitation of consumers and ensure that businesses operate with greater accountability. The revisions also address issues like the arbitrary withholding of seller payments by platforms such as Coupang and 11st, requiring more specific and justifiable grounds for such actions. This regulatory intervention is crucial for maintaining consumer trust and promoting healthy competition within South Korea's vibrant e-commerce sector.

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It is an unfair clause that burdens the user with responsibility for transaction safety and service outcomes that the business should bear.