- 47 Unfair Contract Terms (13 Categories) Corrected, Including Liability Waivers and Improper Use of Personal Information
- Enhancing Consumer Protection Ahead of Black Friday, the Peak Overseas Direct Shopping Season
The Korea Fair Trade Commission (KFTC) has reviewed the terms and conditions of AliExpress and Temu, identifying and rectifying 47 unfair clauses across 13 categories. These included terms that unreasonably limited the platform operators’ liabilities, improperly collected and used personal data, and placed consumers at a disadvantage in legal disputes.
- 16 unfair clauses in AliExpress's terms of service
- 31 unfair clauses in Temu's terms of service
Background of the Review
As the e-commerce market grows, the volume of overseas direct purchases (referred to as overseas direct shopping) by South Korean consumers has surged:
- Online shopping transactions: 190 trillion KRW (2021) → 227 trillion KRW (2023)
- Overseas direct purchases: 5.1 trillion KRW (2021) → 6.8 trillion KRW (2023)
For the first time, Chinese products have overtaken American goods in the overseas shopping market, accounting for 48.7% of purchases in 2023.
The rapid rise of Chinese e-commerce platforms like AliExpress and Temu has led to widespread usage, with an estimated 10 million South Korean users. However, growing consumer complaints about unsafe products, personal data breaches, and unfair terms in these platforms highlighted the need for stricter oversight.
Key Unfair Clauses and Actions Taken
1. Exclusion of Legal Responsibility and Restriction of Compensation
- Issues:
- Clauses excluding the platforms' responsibility as intermediaries.
- Broad limitations on liability for damages caused by the platforms.
- Action Taken:
These terms were deemed invalid as they failed to meet the platforms' legal obligations as intermediaries. AliExpress and Temu have amended their terms to ensure that they bear appropriate responsibility under South Korean laws and regulations, including specifying their role in resolving user disputes.
2. Improper Collection and Use of Personal Information
- Issues:
- Unlimited collection of personal data without specifying its purpose.
- Clauses granting platforms and affiliates broad rights to use user-generated content while stripping users of their rights.
- Action Taken:
Both platforms now limit the scope of data collection to what is necessary, specify the usage of collected data, and clarify that users retain control over their content in compliance with South Korea's Personal Information Protection Act and Copyright Act.
3. Jurisdiction Clauses Favoring Foreign Courts
- Issues:
- Clauses designating exclusive jurisdiction in Hong Kong (AliExpress) or Singapore (Temu) for disputes.
- Action Taken:
These terms were deemed invalid as they placed South Korean consumers at a disadvantage. The platforms now apply South Korean law and follow the jurisdictional rules of South Korea's International Private Law.
4. Other Unfair Clauses
- Ambiguous account termination conditions allowing sudden account suspension.
- Terms presuming agreement to changes by mere website access.
- Clauses enabling service changes or discontinuation without notice.
- Prohibitions against filing lawsuits for damages arising from disclosed user information.
- Mandatory arbitration clauses waiving users' rights to legal action.
These clauses were either removed or revised to eliminate unfair disadvantages to consumers.
Significance and Future Plans
This landmark decision underscores the principle that foreign businesses operating in South Korea must adhere to domestic consumer protection standards. The rectification of AliExpress and Temu's terms is expected to enhance the rights of the 13 million South Korean consumers engaging in overseas direct shopping.
As Black Friday approaches, this action ensures that consumers can shop with greater confidence. The KFTC will continue its efforts to identify and rectify unfair terms across various sectors to foster fair trade practices and safeguard consumer rights.