Where are the trade oversight authorities?

Two ecommerce majors affiliated with Singapore-based Qoo10 are shaken by chain withdrawals by service providers and users due to their deferred payments from liquidity-related issues. Travel agents and retailers are pulling out or cancelling their goods and services from TMON and WeMakePrice, causing massive damages to consumers. TMON and WeMakePrice are respectively ranked as the No. 4 and No. 5 domestic players in the ecommerce market. The two ecommerce majors each command 4.37 million and 4.32 million users, respectively.

Payment delays to service providers resulted from the relentless acquisition spree by Qoo10. The online marketplace acquired TMON in 2022 and Interpark Commerce and WeMakePrice last year. In February, it bought California-based Wish for $173 million. The domino payment delays in WeMakePrice and TMON led to a scurry of flight ticket and hotel booking cancellations during the peak summer season. Refunds also are uncertain. The two ecommerce platforms currently cannot administer credit card settlements or comply with refund demands.

Some are already fearing an app blowout like the Mergepoint debacle in 2021. The popular online discount app provider faced a class lawsuit after it abruptly stopped the circulation of Mergemoney which users bought and accumulated for 20 percent discount coupons at eateries and retail subscribers. WeMakePrice and TMON also sold cash and gift tokens based on advanced payments in return for discounts. If they sold the discount packages to cover up for their liquidity shortage, they have committed the same convicted crime of the operator of Mergepoint.

In a legislative hearing on Wednesday, Fair Trade Commission (FTC) Chair Han Ki-jeong said the FTC cannot directly get involved as deferred payment is a civil credit issue. A civil case must be dealt with between the concerning parties. But the government must not sit on its hands upon a serious liability issue in ecommerce entities whose combined payment settlement exceeded 1 trillion won ($722.5 million) last month. The two online platforms fall under the telecommunications sales agent category under FTC jurisdiction. The antitrust agency must examine any flaws in their advertising and consumer protection mandates. The Financial Supervisory Service also must monitor the cash liquidity status of the two platforms, as they are categorized as electronic financial businesses.

The two online platforms normally relay the funds to sellers two months after customers make payments. They fell behind payments because they used customers’ money somewhere else. The companies vowed a new settlement system to place payment dues in a third-place account. This comes too late. Still, the amends must be made quickly and surely. The government also must do its share to protect consumers.