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Newsletter | July 2016, Issue 2
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TECHNOLOGY, MEDIA & TELECOMMUNICATIONS
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Amendment to the E-Commerce Act Addresses Several Debated Issues
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On March 3, 2016, the Korean National Assembly passed amendments to the E-Commerce Act (the “Act”), which were promulgated on March 29, 2016.
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The amendments, scheduled to go into effect on September 30, 2016, cover several important issues that have been subject to debate.
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Limitation on the Right to Rescind Contracts for Services and Digital Contents
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Before the amendment, the Act provided no firm basis for business entities to limit consumers’ rights to rescind contracts for services and digital contents.
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Acknowledging the need, the amended Act now permits a business entity’s limitation of customers’ rights to rescind contracts for services and digital contents as long as: (1) consumers receive prior notification (indication) of such restriction; and (2) trial products are provided to consumers beforehand.
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This amendment, however, does not apply to unperformed portions of contracts for severable services or digital contents
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Strengthening Online Retail Brokers’ Obligations
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Before the amendment, online retail brokers (those who only provide a platform for online sales) were exempt from liability to consumers if they notified consumers of their limited role as a broker and entered into indemnification agreements with relevant online retailers.
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Regardless of the above, under the amended Act, online retail brokers may now be held directly liable to consumers if they perform certain important functions, such as receiving orders or payments.
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Modified Sanctions Provisions
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Under the amended Act, the Korea Fair Trade Commission (the “KFTC”) may issue an order to temporarily suspend a website, partially or in its entirety, if: (1) it is clear that false or misleading information was posted or deceptive means were used via websites to solicit consumers, or to hinder their rights to rescind contracts; (2) consumers incurred property damage as a result of a relevant transaction; and (3) there is an urgent need to prevent further damage to multiple consumers.
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The amended Act relaxes the requirements for issuing a business suspension order and provides criminal sanctions for any physical interference with a government investigation (e.g., blocking entrance to the investigation site).
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Further, the amended Act provides heavier sanctions for failure to comply with a business suspension order.
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Prohibition of Retention of Resident Registration Numbers
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Previously, online retailers could retain consumers’ resident registration numbers.
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However, the amended Act excludes such information from the list of personal information that online retailers may retain.
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In keeping with the amendment, the KTC has announced that all resident registration numbers retained by online retailers must be destroyed within three months from the effective date of the amendment.
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In addition
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The amendments strengthen obligations of electronic bulletin board service providers in connection with e-commerce via electronic bulletin boards (e.g., internet café and blog services).
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Service providers are now obligated to file dispute relief requests to consumer dispute resolution organizations on consumers’ behalf, and to implement measures to prevent consumer damage.
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Back to Main Page
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