Loose laws irk Internet shoppers

A 38-year-old housewife, Song Su-mi, recently bought an adhesive ‘Eve’s Bra’ from a well-known Internet auction site. The manufacturer described the bra as being made of German medical-grade silicone rubber, which adheres easily to the skin and allows women to wear low-backed dresses without a strap across the back. Ms. Song ordered the garment but later learned that it was made of domestic resin silicone, a lower-quality product for the purpose. Auction, G-Market and Daum-Onket also advertised the same product until early this month; other online markets acted more quickly, stopping sales and offering refunds on request. But when Ms. Song complained, the online store where she saw the product responded that it was only an intermediary and accepted no responsibility for truth in advertising or other aspects of transactions between sellers and buyers on its site. There is a thicket of policies posted by online stores that can vary greatly from site to site. The only common denominator, in principle at least, is Korea’s electronic commerce protection law. However, that law has a gaping loophole for unwary consumers: It says that if online stores post a disclaimer of responsibility for transactions before something is purchased at the site, they indeed are not legally responsible for misleading or even false advertising. The law went into effect in 2002, and has been unchanged since then. Last March, the government modified some of the provisions in the law’s implementing regulations but those changes did not alter the basic philosophy underpinning the law. Online marketeers, “telecommunications trade intermediaries” as the law calls them or e-marketplaces in common usage, are the Internet equivalent of newspaper classified advertising. They are still largely unregulated. These are sites where sellers, either individuals or companies, post items for sale and buyers respond. One such site is Auction, Korea’s largest buy-and-sell site and now a subsidiary of eBay of the United States. G-Market; Daum Onket, which was acquired by Daum Communications Corp. early this year and Interpark Open Market are other examples in Korea. The other major class of online merchants in Korea are Internet shopping malls. They include Interpark, GS e-shop and Lotte.com, and sell products the company’s own buyers select. The company that operates the site is required to stand behind its products. The business volume at e-marketplaces has quintupled in the past three years, and the two largest, Auction and G-Market, rang up 101 billion won ($98.5 million) in combined sales commission revenue in the first half of this year. The two largest online shopping malls, Interpark and Daum’s D&S Shop, earned a combined 91 billion won. Other statistics about the businesses are also impressive. There are well over 4,000 domestic online stores in Korea and, according to a survey by the National Statistics Office this month, the trade volume of all online commerce set a record of 892 billion won in July. Total online trade amounted to 2.8 trillion won in the first half of 2002. That trade more than doubled, to 4.9 trillion won, during the first six months of this year. Over the past three years, consumer complaints about online venders to the Korea Consumer Protection Board nearly tripled, from 4,600 to 13,000. Most of the online stores are online malls, and there is little controversy about them because the responsibility for misleading advertising or shoddy merchandise is clear. Problems arise, however, at e-marketplaces, who collect commissions but can decline responsibility for what is sold. Jeong Ji-yeon from the Electronic Commerce Resource Center of Seoul City said the institution has received persistent complaints over the past year about consumer fraud by five companies that have been heavy users of online markets. The operators swindled customers by featuring postings of breathtakingly inexpensive prices on Internet comparison shopping sites where buyers can see a range of similar products from different vendors but ordered goods were never delivered. Ms. Jeong said there is no compensation available under current law. Who pays to return goods is also a contentious issue. The law says that buyers must pay for return shipment to either kind of online merchandiser if the reason for the return is “customer remorse,” that is a change of mind. Sellers must pay if the product is defective. That leaves a large gray area for returns involving problems with size, color or the like, on which the law is silent. Online businessmen also have some gripes, and claim the legislation has other flaws that make their lives difficult. When manufacturers advertise on e-marketplace sites, a loophole in the electronic commerce law means they can freely exaggerate or even lie about their goods. Truth-in-advertising laws apply only to ads in the print or broadcast media. When such ads trigger purchases and complaints, the e-marketplace operators say, the complaints are often directed at them, not at the manufacturer. Online mall operators also complain about legislative provisions that can result in fines of as much as 2 percent of an online shopping mall’s annual revenue on charges of false advertising. By contrast, an e-marketplace operator can disclaim any responsibility and is not accountable for their online sales pitches. With those inconsistencies and loopholes, calls for revision of the law have been rising. by Lee Young-ryeol