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SNS markets refuse a refund or shorten a cooling-off period, preventing consumers from cancelling orders 2019-09-30

 

SNS markets refuse a refund or shorten a cooling-off period, preventing consumers from cancelling orders

- The KCA discussed ways to strengthen cooperation for the improvement of the markets with the KFTC and SNS platform providers -

 

 

    With a growing popularity of social networking services (hereinafter referred to as ‘SNS’), such as blogs and Instagram, the SNS market is emerging as a new online shopping platform. According to the Act on the Consumer Protection in Electronic Commerce, etc. (hereinafter referred to as ‘Electronic Commerce Act’), SNS market operators shall allow consumers to cancel an order, and provide information on business operators to consumers, but many of them do not comply with those obligations, causing damage to consumers.

 

    Accordingly, the Korea Consumer Agency (President Hee-sook Lee) analysed consumer damage involving the SNS market, and conducted a fact-finding investigation regarding transactions through the SNS market.

 

* SNS platform provider: a person who provides a service to enable Internet users to form human social networks, and the Electronic Commerce Act defines the person as ‘provider of electronic message board services.’

* SNS market: a market where product transactions are performed on SNS, not the existing online shopping malls or open markets (Gmarket, 11STREET, etc.)

Non-fulfillment of contract,’ including non-delivery of products, accounted for the largest share of SNS market-related consumer damage.

    The number of applications for damage redress involving the SNS market received at the KCA from 2016 to 2018 amounted to 169. By type, ‘non-fulfillment of contract,’ including non-delivery of products, accounted for 68 cases (40.2%), the largest share, followed by ‘cancellation of orders’ (60 cases (35.5%)). By product category, ‘clothes and fabric items’ accounted for the largest share, with 148 cases (87.5%).

 

Classification

Number of Consumer Damage Case (%)

Non-fulfillment of Contract

68 (40.2%)

Cancellation of Orders

60 (35.5%)

Revocation or Termination of Contract, Penalties

17 (10.1%)

Quality

15 (8.9%)

Others

9 (5.3%)

Total

169 (100.0%)

 

Many of the investigated SNS markets did not comply with the consumer protection-related provisions of the Electronic Commerce Act (obligations to allow order cancellations, and provide information on business operators)

 

    The result of the investigation on whether markets on six SNS* platforms that are widely used by domestic consumers comply with the ‘Electronic Commerce Act’ found that the majority of the markets did not follow the consumer protection-related provisions of the Act.

    * (domestic) Naver Blog & Cafe, BAND, KakaoStory, (overseas) Facebook, Instagram

 

 

- (Subject of Investigation) mail order distributors who perform e-commerce transactions on SNS platforms (domestic platforms: 266 mail order distributors (or markets), overseas platforms: 145 mail order distributors (or markets))

- (Contents of Investigation) whether the subjects comply with the Electronic Commerce Act (cancellation, etc., of orders, provision of information on business operators, etc.)

- (Period of Investigation) April 8~26, 2019

    In the case of the domestic SNS platform-based markets, 265 (99.6%) out of the 266 investigated markets prevented consumers from canceling orders by refusing to give a refund, shortening a cooling-off period in which the consumers can cancel an order, providing no information regarding order cancellations, etc. In particular, many of the markets notified that no cancellations are allowed on custom orders, group buying, etc., or shortened a cooling-off period from a statutory period of 7 days to 1~3 days.

 

    In addition, 75 markets (28.2%) did not provide information on business operators or provided only some of the information. And out of the 206 markets which provided information about payment methods, 95 markets (46.1%) allowed cash payment only, and 52 (25.2%) induced consumers to make cash payments.

Meanwhile, in the case of the overseas SNS platform-based markets, no market properly provided consumers with information about the order cancellation provisions of the Electronic Commerce Act, and complied with the provisions. Also, the markets did not comply with the obligation to provide information on business operators. On top of that, 131 (90.3%) out of the 145 investigated markets did not even provide information about payment methods.

 

 

The KCA discussed ways to cooperate for the SNS market improvement.

 

    Based on the result of the investigation, the KCA advised the business operators who did not comply with laws to take voluntary corrective actions. In addition, it held a joint meeting, last June, in collaboration with the Korea Fair Trade Commission (KFTC) and SNS platform providers to form a cooperative relationship for the improvement of the SNS market, and discussed ways to cooperate for the prevention of damage to consumers.

 

    Furthermore, the KCA plans to ▲ request the KFTC to consider adding a new provision for self-regulation to the ‘Guideline on the Consumer Protection in Electronic Commerce, etc.,’ so that SNS platform providers can regulate SNS markets on their own, and also ▲ provide information, including educational materials, for raising awareness of consumers and business operators and preventing damage to consumers.

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