Gov't tightens regulations on AliExpress, Amazon as customer complaints rise

Industry

Published: 13 Mar. 2024, 17:36

Gov't tightens regulations on AliExpress, Amazon as customer complaints rise

Fair Trade Commission Chair Han Ki-jeong speaks during the Emergency Ministerial Meeting on Economic Affairs at the government complex in central Seoul on Wednesday. [YONHAP]

Korea’s Fair Trade Commission (FTC) is tightening its grip on overseas e-commerce players such as AliExpress, Temu and Amazon with new consumer protection rules as overseas direct purchases grow.

The antitrust regulator announced Wednesday that it will soon require foreign e-commerce companies to designate a local representative based in Korea and establish communication channels dedicated to customer complaints regarding overseas e-commerce platforms.

“We need to take urgent action to address concerns of discrimination against local operators and enforce compliance with local regulations on overseas service operators,” FTC Chair Han Ki-jeong said during the Emergency Ministerial Meeting on Economic Affairs at the government complex in central Seoul on Wednesday.

The volume of online overseas direct purchases increased by 26.9 percent on year in 2023 to a record high of 6.8 trillion won ($5.17 billion), according to Statistics Korea’s latest data. Those from China surged by 121.2 percent to reach 3.9 trillion won, displacing the United States from the top spot for the first time.

The antitrust regulator also said that it will bolster its monitoring for possible violations of the E-Commerce Act and the Fair Trade Act by foreign operators, promising to apply the same regulatory standards as local counterparts.

As part of the plan, the FTC will propose a revision to the E-Commerce Act to require overseas companies over a certain size to designate a legal representative in Korea to handle consumer protection in the country.

“It has been difficult to investigate or impose penalties on overseas online platform operators due to physical limitations and such, despite such companies being subject to local regulations,” Park Se-min, director-general of consumer policy at the FTC, told press on Wednesday at the government complex in Sejong.

“While the current law obligates [overseas companies] to have human resources handling consumer conflicts and complaints, requiring them to name a local representative will further strengthen such obligations,” said Park.

Moreover, a hotline to resolve consumer complaints will be set up between overseas companies and the Korea Consumer Agency, while a communication channel dedicated to consumer complaints regarding overseas platforms will be expanded.

The regulator will strengthen a joint effort among related government branches — including the Ministry of Food and Drug Safety, the Korean Intellectual Property Office, the Korea Customs Service and Personal Information Protection Commission — regarding four key areas of focus: food and drugs, counterfeit goods, explicit content and breaches of personal information.

A government task force will be set up to spearhead the initiative as well.

The move comes as Chinese direct purchasing service operators such as AliExpress and TEMU are making strides in the Korean e-commerce market.

AliExpress’ mobile app has garnered a record 8.18 million Korean monthly active users as of February, an on-year increase of 130 percent, according to WiseApp. AliExpress ranked second among online retailers in Korea, trailing Coupang.

As the number of users rises, so has the number of grievances. A total of 673 customer complaints were submitted to the Korea Consumer Agency regarding AliExpress last year, tripling the previous year's figure. An additional 212, nearly a third of last year's total, were submitted in January of 2024 alone.

The FTC recently conducted an on-site inspection at AliKorea in central Seoul, which handles the company's marketing in Korea, in response to the surge of customer complaints.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]