Ⅰ. Background and purpose
□ Background of research
○ In South Korea, the need for protection of consumers emerged as an important social issue in the 1970s amid the country’s achievement of a rapid economic growth. The country has made efforts to settle such issues by enacting laws, including The Consumer Protection Act (1980), in diverse sectors related to consumer transactions and safety.
○ Thirty-two years have passed since the enactment of The Consumer Protection Act, which was the first consumer law adopted in the country. During this period, South Korea achieved a rapid economic growth and became the 24th member of the Development Assistance Committee(DAC), an affiliate organization of the Organization for Economic Co-operation and Development(OECD), in 2009. The country’s consumption-related matters have gone through epochal changes along with changes in the social and economic sectors.
□ Purpose of research
○ It is necessary to make preparations to develop the country’s consumer laws in a future-oriented way that can meet the rapid changes in consumer environment and fulfill its desired objectives. This study intends to shed light on the process of the development of the country’s consumer laws, check their current status and problems, and come up with their future prospects.
○ Developing countries in Asia or transitional countries that are having a rapid economic growth also see an increasing need for the formulation of policies for consumer protection and compensation for consumer damages. It is expected that this study on South Korea’s consumer laws will be useful as a referential material for later-starting countries in connection with their need to revamp their similar laws.
Ⅱ. Major contents
□ South Korea’s economic growth and consumer laws
○ In South Korea, civic organizations, particularly women’s organizations, started brisk consumer protection activities, having been awakened to the importance of the matter, in the 1970s. They kept up the pressure on the Government to enact framework laws for consumer protection and the Government started paying attention to the matter.
○ In 1980, the Government enacted The Consumer Protection Act, which was the first law enacted for consumer protection and it served as a framework law for the said purpose, but did not push ahead with a substantial policy for consumer protection. It was the 1980 amendment to The Consumer Protection Act that started the consumer protection policy in earnest, and as a result, a series of laws related to consumer transactions and safety came to be enacted.
○ In 2006, The Consumer Protection Act was replaced by The Framework Act on Consumers. It is said that with this replacement the focus of the country’s policy switched from consumer protection to the realization of consumer sovereignty.
□ Analysis of the status of South Korea’s consumer laws
○ Despite the enactment of The Consumer Protection Act in 1980, no substantial action had yet been taken to push ahead with the consumer protection policy. Clauses of the said Act concerning obligations of the central or local Government were merely declarative and the system for promotion of a consumer-related policy was not in motion yet. However, the situation changed with the 1980 amendment to The Consumer Protection Act. Under the amendment, the Economic Planning Board (EPB) was designated as the agency in charge of consumer policy deliberation (now its function is assumed by the Fair Trade Commission) and the Korea Consumer Protective Board (KCPB) [now under the name Korea Consumer Agency (KCA)] was designated as the agency in charge of consumer policy execution. The Government started pushing ahead with consumer policies with such revamp in the system for promotion.
○ Since 1986, laws have been enacted in diverse sectors to accomplish the aim of consumer protection. Major laws on consumer transactions include: The Regulation of Standardized Contracts Act, The Doorto-Door Sales, etc. Act, The Installment Transactions Act, The Act on Fair Labeling and Advertising, The Act on Consumer Protection in the Electronic Commerce Transactions, etc. A major law on consumer safety is The Product Liability Act.
□ Analysis of the development process concerning South Korea’s consumer laws
○ In South Korea, the revamp of the consumer policy promotion system with the 1986 amendment to The Consumer Protection Act served as an occasion for commencement of the efficient promotion of a consumer policy.
○ In the beginning, consumer policy was handled by the EPB, which was the Government’s central agency in charge of economic affairs. Now, the role is assumed by the Fair Trade Commission. Another Government agency that plays a central role in execution of consumer policies is the Korea Consumer Agency, which was established in 1986 under The Consumer Protection Act, and it handles matters concerning compensation for consumer damages.
○ The country’s consumer transaction-related laws compel businesses to comply with the relevant administrative laws and regulations concerning consumer protection (i.e. “administrative regulation”).
○ The Framework Act on Consumers contains clauses on the recall system and consumer safety. Individual laws related to consumer safety, like The Framework Act on the Management of Disasters and Safety, have been enacted. Like this, individual laws contain stipulations on the consumer safety policy.
○ In South Korea, consumer laws were developed with the focus on substantive law perspectives, but recently improvements have been made from a perspective of procedural laws, with the adoption of the systems of consumers’ collective action and collective dispute mediation in The Framework Act on Consumers in 2006. Continued improvements should be made on existing consumer laws, considering that they lack systematic apparatuses for compensation for consumer damages.
○ It is necessary to revamp the system of judicial responsibility so that consumer damages may be settled within the framework of private autonomy.
□ Factors to be considered concerning consumer laws of South Korea
○ Consumer protection should be established as a philosophy. A country’s economy can have further growth through efforts made to enhance the quality of goods to give consumers satisfaction. Thus, consumer protection can play a role as an engine for economic growth. Consumer protection is a philosophy essential for a country’s economic growth.
○ Upon establishment of consumer protection as a philosophy, priority should be placed on establishment of a consumer policy promotion system. In South Korea, it was only after the 1980 amendment to The Consumer Protection Act that the consumer policy promotion system started to be promoted. It shows that the establishment of a consumer policy promotion system should be given priority.
○ Next, laws related to consumer transactions/safety should be revamped. Individual consumer-related areas are where consumer protection issues are raised and where consumer transactions-related laws should be revamped, along with the laws related to consumers’ health and safety.
○ Consumers need to carry out campaigns designed to protect them Ultimate solutions to consumer-related problems can only be found through consumers’ self-enlightenment.
Ⅲ. Expected effects
□ Checking the current status of South Korea’s consumer laws will help those concerned learn from what the country has experienced and be prepared for future.
□ Noticeable factors in South Korea’s consumer laws presented in this study will be useful materials for developing countries that intend to revamp their consumer laws.
Chapter 1. Introduction 13
Section 1. Purpose of study 13
Section 2. Scope of research and methods used 16
Chapter 2. South Korea’s economic growth and consumer laws 19
Section 1. Overview 19
Section 2. Analysis of the process of the development of consumer laws 24
Section 3. Process of development in consumer laws 46
Chapter 3. Status of South Korea’s consumer laws 51
Section 1. Overview 51
Section 2. Changes in The Framework Act on Consumers 52
Section 3. Consumer transaction laws 61
Section 4. Consumer Safety Laws 69
Chapter 4. The Promotion and Execution of Consumer Policy 75
Section 1. System for consumer policy promotion 75
Section 2. Consumer policy executing agencies 80
Section 3. Consumer policy-regulating measures 86
Chapter 5. The Consumer Safety and Consumer Damage Compensation 93
Section 1. Securing of consumer safety 93
Section 2. Consumer damage compensation 94
Section 3. Examination 102
Chapter 6. Conclusion 113