'Black Consumers and Strategic Lawsuit Concerns'... 68.8% of SMEs Oppose Class Action System

SME Central Association Announces Survey Results on Small Business Opinions Regarding the Expanded Introduction of Class Action Lawsuits

[Asia Economy Reporter Kim Jong-hwa] Seven out of ten small and medium-sized enterprises (SMEs) oppose the proposed expansion of the 'class action system.' They are most concerned about 'lawsuits by black consumers' and 'planned lawsuits aimed at settlements.'

According to the results of the 'SME Opinion Survey on the Expansion of the Class Action System,' conducted by the Korea Federation of SMEs from the 12th to the 23rd of last month targeting 500 consumer goods SMEs, 68.8% of the responding SMEs opposed the class action system expansion plan announced by the Ministry of Justice on September 28.

Regarding the expansion of the class action system, the main concerns of SMEs (multiple responses allowed) were 'increase in lawsuits by black consumers (72.8%),' 'increase in planned lawsuits aimed at settlements and attorney fees (56.6%),' 'increase in costs for legal responses (24.6%),' and 'overlapping punishments including criminal penalties and administrative sanctions (7.8%).'

Therefore, SMEs requested the government and the National Assembly to establish institutional safeguards such as △ selective introduction in individual laws (38.6%) △ support for legal services (31.8%) △ establishment of safeguards to prevent double punishment (30.0%) △ strengthening of litigation permission requirements (27.4%) △ mandatory prioritization of dispute mediation (19.4%).

Among companies that have experienced lawsuits (4%), 85% opposed the introduction of the class action system, a relatively higher proportion than those without experience. The main reason was 'disruption of normal business operations due to lawsuit responses (35.0%).' Other reasons for opposition included the burden of hiring lawyers or other representatives (30.0%), damage to corporate image (25%), and disadvantages in business activities such as financing (10%).

Notably, 92.2% of the responding companies do not have legal teams or lawyers, revealing that they are defenseless against the expansion of the class action system. In cases requiring legal responses, 11.9% rely on internal staff who are not legal experts to review matters, and 11.5% have no special measures, indicating that SMEs’ legal response capabilities are very weak.

There were also opinions in favor of introducing the class action system. Some companies expressed views such as 'If the system is well established, it is positive for the vulnerable,' and 'It is a necessary system for the vulnerable.'

Kim Ki-moon, Chairman of the Korea Federation of SMEs, emphasized, "Just being sued can damage a company's credibility and cause a sharp decline in sales, making business activities difficult, and micro-enterprises may even face bankruptcy. It is desirable to selectively introduce the class action system in individual laws to minimize side effects."

This content was produced with the assistance of AI translation services.