- Corrective Orders and Fines Imposed for Actions Such as Shortening Withdrawal Periods and Restricting Returns of Defective Products -
The Korea Fair Trade Commission (hereinafter referred to as 'KFTC') has decided to issue corrective orders, warnings, and impose fines totaling 10.5 million won on four idol merchandise sellers, including Weverse Company, for violating the "Act on the Consumer Protection in Electronic Commerce, etc." (hereinafter referred to as the "E-Commerce Act") by restricting withdrawal of subscription rights. The violations included: ▲ setting arbitrary withdrawal periods shorter than those prescribed by law, ▲ refusing refunds without a video recording of the unboxing process, and ▲ failing to provide specific information about when products could be received.
- Companies involved: Weverse Company Inc. (Weverse Shop, weverseshop.io), YG Plus Inc. (YG Select, ygselect.com), SM Brand Marketing Inc. (SM Town & Store, smtownandstore.com), and JYP 360 Inc. (JYP Shop, www.thejypshop.com).
** The E-Commerce Act allows for the imposition of fines (as an alternative to business suspension) only in cases of failure to comply with corrective orders or repeated violations, but these companies did not meet those conditions.
Under the E-Commerce Act, consumers are allowed to withdraw from a purchase within seven days of receiving the goods, or within three months if the goods are defective (or 30 days from the date the defect is discovered). However, withdrawal rights may be restricted if the goods have been damaged, used, or if the packaging of duplicable goods has been damaged. The burden of proof for these conditions lies with the seller.
Despite this, the companies involved displayed information on their online stores' product detail pages and FAQs that: ① ▲arbitrarily shortened the withdrawal period to 'within 7 days' for defective products, ② ▲refused exchanges or refunds for damaged packaging, ▲required video recordings of the unboxing process for exchange or refund requests due to missing components, and ▲limited returns for made-to-order products that were essentially just pre-orders.
The KFTC determined that these actions by the idol merchandise sellers misrepresented the legally defined withdrawal periods and exceptions, constituting acts that obstruct consumers from exercising their withdrawal rights by providing false or exaggerated information, in violation of Article 21, Paragraph 1, Clause 1 of the E-Commerce Act.
Additionally, Weverse Company was found to have violated the information provision obligations under Article 13, Paragraph 2, Clause 4 of the E-Commerce Act by failing to specify the delivery times for some products, such as membership kits, by stating vague terms like 'sequentially shipped within the next quarter based on the purchase date,' making it difficult for consumers to know when they would receive their items.
This action is significant because it identifies and corrects illegal practices in the entertainment industry targeting teenagers, who are the primary consumers of idol merchandise but may have a lower awareness of their rights under the E-Commerce Act. It is also expected that this action will help increase understanding of consumer rights among the youth, who will become the mainstay of economic activities in the future, and improve compliance with the law across the industry.
The KFTC plans to continue monitoring violations of the E-Commerce Act in areas closely related to youth, such as idol merchandise, and will impose strict sanctions if similar violations occur in the near future.