On March 26, 2024, the Korea Fair Trade Commission (“KFTC”) issued a legislative notice over a partial amendment to the Act on the Protection of Consumers in Electronic Commerce (“E-Commerce Act”) to introduce the local agent system and the consent decree system (the “Proposed Amendment”). The purpose of the Proposed Amendment is to address the need to (i) protect consumers of overseas companies that do not have an address or business place in Korea, and (ii) provide timely remedies to consumers who suffered damages caused by an overseas company’s violation of the E-Commerce Act.
The KFTC has announced that it plans to collect public opinions on the Proposed Amendment until May 7, 2024, and will thereafter push forward with completing the amendment process. As the amendment process is likely to gain momentum after the 22nd parliamentary election (early April), close monitoring over the developments and progress of the Proposed Amendment is advised.
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Obligation for Overseas Entities of a Certain Size to Designate a Local Agent
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Introduction of Consent Decree System |
In light of the recent emphasis and drive on the need to strengthen protection for users of overseas online platforms, various Korean regulatory agencies, including the KFTC, have expressed their intent to strengthen regulations and engage in active enforcement over overseas entities, and the Proposed Amendment could be said to be one of such policy directives. If implemented, the local agent designation obligation under the Proposed Amendment is expected to have a particularly substantial impact on overseas online service providers operating in Korea, as it could create an avenue for domestic regulators to more easily investigate overseas online platforms and could also increase the likelihood for regulators to directly impose legal liability on overseas online service providers. To that end, overseas online service providers are advised to closely monitor the legislative and regulatory developments.