Resellers rejoice as crackdown from Nike, Chanel are lifted

The Nike logo is shown on a store in Miami Beach, Florida. [AP]

Fashion brands like Chanel, Hermès and Nike once limited purchases of suspected resellers but the restriction will be removed after an order from the antitrust regulator following an investigation.

The Fair Trade Commission (FTC) announced Wednesday that after an authoritative review of popular brand websites and their terms and conditions of purchases, 10 types of unfair conditions were corrected. Among those conditions was the provision that prohibits reselling.

Some brands could previously cancel orders or suspend memberships if they suspected a customer was making purchases for reselling purposes.

Chanel had the authority to “strip memberships of those under reasonable suspicion of reselling based on purchasing patterns,” in its conditions. Nike had the “right to limit purchases and orders or cancel deals in the case the company believed a customer’s order was made for reselling purposes.”

This meant the brands could hand out penalties if they detected motives to resell based on past purchases or types of purchase orders.

However, the FTC determined that consumers had the right to decide how they wanted to dispose of the purchased goods.

The condition, which unconditionally prohibited deals with third parties, was viewed as going against the Terms and Conditions Act. The act of relying on the business’s judgment without an objective criterion to evaluate reselling purposes was also seen as problematic.

In addition, conditions that allowed the revision or editing of customer’s reviews without permission, or granted a license to use members' posts, were determined as violating privacy rights and therefore corrected.

Other unfair conditions included a provision that excluded all business responsibilities regardless of attributable reasons, a provision that allowed for arbitrary cancellation of a contract or order for comprehensive reasons, and a provision that mandated users agree to the comprehensive use of location information.

Businesses all revised the unfair conditions themselves when confronted during the investigation process.

“We will strive to continuously monitor unfair terms and conditions in new markets, which change with the public’s consumption patterns, so that no damages occur,” said the trade commission.

BY CHOI SEO-IN, KIM JU-YEON [kim.juyeon2@joongang.co.kr]