The Korea Fair Trade Commission (Chairman Han Ki-jung) has issued a corrective action (warning) against Costco Korea (hereinafter “Costco”) for violating the Act on Consumer Protection in Electronic Commerce, etc. Costco allowed customers to sign up for the Executive Membership required for store use through electronic documents online, but required in-person visits to cancel the membership.
Costco, which operates a paid warehouse club model, has been offering various types of membership (Business Membership, Gold Star Membership) through its online mall (www.costco.co.kr) since November 2015, and began offering Executive Business and Executive Gold Star Memberships from September 2018.
Of these four membership types, the two “Business” memberships (Business Membership and Executive Business Membership) are for business users, while the two “Gold Star” memberships (Gold Star Membership and Executive Gold Star Membership) are for individual consumers. Among them, the two “Executive” memberships (Executive Business Membership and Executive Gold Star Membership), which are the subject of this enforcement, offer cashback rewards (2% of eligible purchases excluding VAT and coupon discounts, up to 1 million KRW per year, with some exclusions).
While sign-up and cancellation for the standard Business and Gold Star Memberships could be handled online, the Executive Business and Executive Gold Star Memberships allowed online sign-up but required in-person visits to cancel the membership.
This violated the obligation under the E-Commerce Act to provide complete online service. When a business allows membership sign-up and related processes through electronic documents, it must also provide withdrawal, contract cancellation or modification, and consent withdrawal through the same electronic means (E-Commerce Act Article 5, Paragraph 4).
The requirement for online-complete service is intended not only to increase consumer convenience by allowing simple online processes for membership and contracts, but also to create an efficient and convenient transaction environment for both consumers and businesses.
As a result of the recent enforcement, Costco fully improved its system as of January 27, 2025, allowing Executive Members to cancel their memberships electronically without visiting a store.
Now, members who joined the Executive Membership via Costco’s online mall (www.costco.co.kr) can cancel their membership through the following path on the website: My Page > My Info > Executive Membership Cancellation. Note that any cashback rewards will be forfeited upon cancellation, so members should check and consider this carefully before proceeding.