KLRI : KOREA LEGISLATION RESEARCH INSTITUTE

Ⅰ. Backgrounds and Purposes

○ With the rapid growth of online flea market platforms like Dangguen Market, Junggonara, Beongaejangteo and Hello Market, damage or disputes occurred in such platforms are increasing accordingly.

  - Online flea market platforms mean a platform representing C2C intermedi -ation service platforms, which acts as an intermediary for transactions between individuals. 

  - The Act on the Consumer Protection in Electronic Commerce (hereinafter “the Electronic Commerce Act”) has undergone several amendments to enhance the protection of consumers in electronic commerce since its enactment in 2002. However, these provisions focused on the regulation against transactions between mail order distributors who are direct sellers in electronic commerce and consumers (B2C), or transactions between mail order distributors who are mail order brokers and consumers. 

○ Recently, the Electronic Commerce Act fails to efficiently deal with a rapid surge of damage or disputes in online flea market platforms. Thus, it is necessary to conduct legislative evaluation on the provisions regarding the mail order brokers’ obligations to protect users in transaction between individuals under the Electronic Commerce Act. 

  - In addition, it is necessary to seek proper improvement measures by conducting ex ante legislative evaluation on the amendment to the Electronic Commerce Act, which is proposed as an alternative to the current law.

  -As electronic commerce is conducted through electronic transactions using electronic documents, it is important to conduct ex ante legislative evaluation on the making of provisions related to protecting users of C2C intermediation service platforms. 

 

Ⅱ. Major Content 

▶ Current status of disputes in online flea market platforms and main issues of legislative evaluation 

○ Current status of disputes in online flea market platforms

  - In examining the current status of application for mediation of disputes in secondhand transactions filed to E-Commerce Mediation Committee and the trend of damage caused by secondhand transaction fraud, the number of applications for mediation related to three major online flea market platforms (Danggeun Market, Junggonara and Beongaejangteo) increased 12.3 times from 277 in 2019 to 3,397 in 2021. The amount of damage also skyrocketed from 27 billion won in 2018 to 89 billion won in 2020. 

  - In 2021, the total number of applications for mediation filed to E-Commerce Mediation Committee was 5,163. Among them, 4,177 cases were filed for mediation between individuals, accounting for 80.9%. The number of applications for mediation between individuals increased by 3,271 year-on-year. (361%)

  -The main issues of disputes related to transactions between individuals are: where conditions different from those posted on a platform are presented; where contracts are cancelled or refund or return is not possible; where the actual products are different from those posted; where a seller cuts off contact after receiving the payment of goods; and where a seller sent a fake product after posting as genuine. 

○ Main issues in legislative evaluation

   In conducting legislative evaluation to protect users of C2C intermediation service platforms including online flea market platforms and seeking improvement measures, the following issues should be considered.

  -The feasibility and effectiveness of legislative purposes of the provisions for protecting users of C2C intermediation service platforms under the current Electronic Commerce Act and the amendment to the Electronic Commerce Act and the Framework Act on Electronic Documents and Transactions (hereinafter “the Electronic Documents Act”); and the suitability of methods to achieve such legislative purposes and the consistency and integrity of legal systems.

  - The difference between transactions between business operators and consumers and transactions between individuals and how different the obligations and liabilities of platforms are. 

  - To what extent the users can be protected under Electronic Commerce Act when sustaining the damage or dispute in transactions between individuals. 

  - The reasons for users’ dissatisfaction with countermeasures for damage provided by online flea market platforms and ways to improve the countermeasures by the online flea market platforms.

  - The effectiveness and practical problems of measures to restrict transaction methods of online flea market platforms to respond to users’ damage.

▶ The main content of in-depth interviews and surveys of users of online flea market platforms

○ <In-depth interviews of users experiencing disputes in online flea market platforms, conducted by KLRI in 2022>

○ <Survey on users of online flea market platforms, conducted by KLRI in 2022>

▶ Legislative evaluation on provisions of the protection of users of C2C intermediation service platforms under the Electronic Commerce Act

○ Ex post legislative evaluation on the provisions of the protection of users of C2C intermediation service platforms under the Electronic Commerce Act

<Evaluation of feasibility and effectiveness of legislative purposes>

  - The former part of Article 20(2) of the Electronic Commerce Act and the former part of Article 25(2) of the Enforcement Decree of the same Act prescribes that the scope of identification information that mail order brokers including online flea market platforms should confirm and provide is name, date of birth, address, phone number and email. However, these provisions are not sufficient to achieve legislative purposes of the Electronic Commerce Act in order to protect consumers in electronic transactions and are found to fail to resolve the infringement of personal information caused in the process of the enforcement of the law. 

  - The latter part of Article 20(2) of the Electronic Commerce Act provides that the information shall be provided to parties to transactions without any special reasons such as resolving disputes, etc. This provision is not sufficient to achieve legislative purposes of the Electronic Commerce Act in order to protect consumers in electronic commerce and is found to fail to resolve any problem that can be raised in the process of the enforcement of the law.

  - The provision that a mail order broker is jointly liable for property damage of users when the broker fails to comply with the obligation to provide information to the users has the effect of forcing mail order brokers to comply with the obligation to provide information. Thus, this provision is found to contribute to achieving the legislative purposes of the Electronic Commerce to protect consumers in electronic commerce.

  - Article 20(3) of the Electronic Commerce Act prescribes that in order to resolve complaints or disputes arising from the use of cybermalls, etc., a mail order broker including online flea market platforms shall find out the cause thereof, assess damage and take other necessary measures without delay. This is also found to be effective to contribute to realizing the legislative purposes of the Electronic Commerce Act to protect consumers in electronic commerce. 

<Evaluation of suitability of methods>

  - Article 20(2) of the Electronic Commerce Act confers on mail order brokers obligations to confirm information prescribed by Presidential Decree including the name and phone number, etc. of the parties to the relevant transaction and to provide a method to access to the information on the other party. This provision forces users to indicate unnecessary information and online flea market platforms to re-confirm the information, causing burdens and difficulties. In addition, this provision is found to be an inappropriate and excessive regulation as such regulation raises concerns about adverse effects caused by the exposure of personal information of the users. Thus, it is evaluated that this provision fails to meet the suitability of methods because its methods for responding to damage are excessive. 

  - Article 20(3) of the Electronic Commerce Act and Article 25-2 of the Enforcement Decree of the same Act proscribe that a mail order broker shall promptly take necessary measures prescribed by Presidential Decree, including finding out the cause of damage and assessing damage to resolve complaints or disputes arising from the use of cybermalls, etc. These provisions are evaluated as meeting the suitability of methods as they have appropriate, effective and efficient methods to respond to damage to users of C2C intermediation service platforms. 

<Evaluation of consistency and integrity of legal systems>

  - As Article 20(2) of the Electronic Commerce Act provides for obligations of mail order brokers without classifying requesters of mail order brokerage into business operator and individual, this provision confers legal obligations regardless of the difference of both types of transactions. Under this paragraph, cases where a requester of mail order brokerage is an individual are expressed as “where a requester of mail order brokerage is not a business operator.” This expression decreases the clarity of interpretation of the law, so this provision is found to fail to meet the consistency and integrity of legal systems.

  - Article 20(2) of the Electronic Commerce Act states that a mail order broker has an obligation to confirm the information prescribed by Presidential Decree including the name and phone number of parties to transaction and to provide methods to access the information on the other party. This also means that significant matters related to personal information are delegated to the enforcement decree, which is beyond the limitation of legislation regarding delegation. Thus, it is also evaluated as insufficient to meet the consistency and integrity of legal systems.

 

Ⅲ. Expected Effects

○ Based on objective data and normative methodology, the study aims at evaluating the feasibility and effectiveness of legislative purposes of the provisions regarding the protection of consumers using C2C intermediation service platforms under the Electronic Commerce Act and the proposed amendments to the Electronic Commerce Act and the Electronic Documents Act, the suitability of methods for achieving such legislative purposes and the consistency and integrity of legal systems, thereby providing proper improvement measures for amending to the Electronic Commerce Act and other relevant laws.