Portals may be given liability for blogging vendors’ activities

The government plans to draft a bill making Internet portal sites like Naver liable for the damages suffered by consumers on Internet shopping blogs and in online secondhand retail sites.

The state-run Fair Trade Commission (FTC) is preparing to propose an amendment to the electronic commerce law that gives legal responsibility to portals for some activities of Sadadurim blogs and online markets for joint purchase and purchases of used goods.Sadadurim blogs are run by individuals for free on Internet portals. They are not registered like online shopping malls.

The FTC started to crack down because of consumer complaints but also as part of the agency’s efforts to cooperate with the new government’s pledge to tap into Korea’s underground economy to raise tax revenues.

Illegal Internet transactions are rapidly spreading. Exchanges or refunds are not available from many blogs and getting receipts is impossible. The sites operate like this: They post a picture of a sample product on a community site or blog with a price set.

Site visitors make orders and send money via online banking. The person who runs the blog purchases the ordered product at a lower price than he set and send the product via the mail.
The blog operators avoid losses from backlogs because they only make purchases after orders are received. They don’t need to pay taxes. Their existences on portal sites is basically free.

The current electronic commerce law defines dealers such as online shopping malls and mediators for dealers. Mediators refer to people that provide a marketplace to merchants and arrange deals between merchants and sellers. The mediator has an obligation to find out information about merchants for consumers. When a consumer suffers damages from a merchant, the mediator is liable for the damage.

Currently, open markets such as G Market and 11st are classified as mediators and are subject to the law. But portal companies are not.

The amendment to the law is expected to classify open market as mediators of a higher level and portal sites as mediators of a lower level.

“As the reputation and influence of the portal sites play big parts when consumers purchase online, the purpose of the amendment is to put certain responsibilities on these portals where transactions take place,” said an academic who participated in the discussion for the amendment.

“There were discussions that since the portal sites such as Naver open these blogs and online markets, they should also be regulated,” said Seo Hee-seok, Pusan National University Law School professor. “The FTC agrees with that view,”

The FTC announced Wednesday the status of illegal shopping blogs and online markets on Naver and Daum.

There are currently 64,000 blogs and unregistered open markets operating on Naver and 35,000 on Daum. The number of consumer complaints filed to the FTC also increased from 615 in 2011 to 720 last year, according to the FTC.

Customers mainly reported being unable to contact the merchant after remitting payments, or merchants refusing to accept returns of defective items.

“Internet shopping malls pay tens of millions of won to advertise on Naver. It is contradictory that these portals take money from business operators like us and not take responsibility for the illegal businesses going on in their blogs,” said an online shopping mall for women’s clothing.

However, the portals say that giving them liability is wrong since they don’t get any fees from the merchants.

By Shim Seo-hyeon [kjy@joongang.co.kr]