Reasons for Proposal
Reasons for Proposal
The rapid growth of digital economy and development of contactless transactions caused by the long-term pandemic led to the surge of online markets, reorganizing the transaction structure based on online platforms.
However, the Act on Consumer Protection in Electronic Commerce, etc. (hereinafter referred to as "Electronic Commerce Act") currently in force fails to reflect various transaction patterns generated in the changed market or to prescribe a thorough regulation system since it is predicated on traditional mail orders. In addition, there is a global movement to establish a separate regulation system for platform-centered electronic commerce, and several countries including China, Japan, EU, etc. are moving forward legislation-wise.
Therefore, this bill is intended to amend the overall provisions of the Electronic Commerce Act so as to provide a regulation system corresponding to the changed market and effectively protect the rights of consumers.
Main Content
a. Renewal of System and Terms of Electronic Commerce Act (Article 2 of the bill)
1) The number of transactions made via online platforms is drastically increasing, and such online platforms not only provide mere brokerage service but also participate actively in transactions through posting of advertisements, receipt of application for subscriptions, receipt of payment, service of payment, receipt of withdrawal of subscriptions, etc. However, the current Electronic Commerce Act does not sufficiently reflect the new transaction structures based on online platforms and changed market circumstances since it is predicated on traditional mail orders.
2) Therefore, in the new bill, business operators subject to the Electronic Commerce Act shall be classified and defined as online platform business operator, online platform-using business operator, and own website, etc.-using business operator, and online platforms shall be classified and defined as the following three types depending on the transaction manner and degree of participation: information exchange intermediation; connection means provision; and transaction mediation.
b. Expansion of Online Platform Business Operators' Duty of Providing Information (Article 21 of the bill) 1) The current Act only prescribes, as the duty of information provision of mail order brokers, that mail order brokers notify the fact that they are not the parties involved in the transaction. As the number of platforms providing both transaction brokerage service and direct purchase is increasing, however, the current information provision is insufficient, leaving the possibility of consumers purchasing brokerage trade products, misunderstanding them as direct purchase products. Thus, online platform business operators (corresponding to mail order brokers in the current Act) shall separate, mark, and notify brokerage trade products and direct purchase products as well as have the duty of notifying that the operators are not direct parties of the transaction.
2) The current Act prescribes that the identification information of a requester of mail order shall be provided to a mail order broker. However, it is difficult for connection means provision platforms under the amended bills to confirm directly the identification information of online platform-using business operators (corresponding to the requester of mail order brokerage in the current Act). Thus, if a consumer can confirm the identification information of an online platform-using business operator via the connection means, such identification information shall be considered to have been provided.
3) It is obligatory to notify the details of business such as receipt of application for subscriptions and receipt of payment performed during a transaction process so that consumers can easily understand such details.
c. Realization of Duties of Online Platform Business Operators (Article 22 of the bill)
1) Despite the growing influence of online platforms in new transaction structures, the current Act mostly imposes the responsibility on online platform-using business operators as parties of transactions. There is a need to realize appropriate duties of online platform business operators reflecting the changed transaction circumstances.
2) The amended bill prescribes that, where an online platform business operator misleads a consumer to consider the online platform business operator as a party of transaction by neither classifying or marking self-sales and platform-using businesses, displaying or advertising that the operator is a party of the transaction, nor supplying products or distributing a contract in the name of the operator, if any damage is sustained by the consumer due to the intention or negligence of an online platform-using business operator, the operators shall be jointly responsible for such damage.
d. Responsibility in Performing Important Duties of Online Platform Business Operators (Article 23 of the bill)
Where an online platform business operator performs important duties such as receipt of application for subscriptions, receipt of payment, etc. while mediating transactions via platform, if any damage is sustained by a consumer due to such duty, the online platform business operator shall be directly responsible for compensation for the damage; and if there is any business operator directly related to a mediated transaction that has caused the damage, the operators shall be jointly responsible for the damage.
e. Consumer Protection in Electronic Commerce Between Individuals (Article 26 of the bill) 1) Despite the increasing number of transactions made between individuals via platforms such as used-item markets, remedies for damages of consumers and arbitration for conflicts therebetween are not appropriately performed. At the same time, there are concerns of the provision of identification information of individual sellers possibly leading to infringement of personal information. Thus, the bill prescribes that online platform business operators running platforms for transactions between individuals shall confirm the minimum identification information of individual sellers, such as phone number, etc., and provide the identification information to a dispute mediation committee, a court, or a consumer (only when the individual seller has agreed to information provision) in case of conflicts. As such, the bill intends to resolve problems including privacy infringement and leak and misuse of personal information that may arise from the direct provision of identification information to a consumer, as well as activating remedies for damage of consumers such as conflict mediation.
2) The bill prescribes advising online platform business operators running platforms for transactions between individuals to use a payment deposit system so as to prevent damage of consumers in transactions between individuals. In particular, consumers shall be informed that the provisions of the Electronic Commerce Act may not apply to transactions between individuals due to insufficient information provision regarding the role of online platforms. Furthermore, since not only individual sellers but also sales business may use an online platform for transactions between individuals, classifying and marking individual sellers and sales businesses shall be obligatory so as to prevent damage in transactions between individuals effectively.
