'Returns Different from Agreement Are Illegal'... Standards for Unfair Transactions in Online Shopping Malls Become Clearer

Fair Trade Commission Implements 'Guidelines for Reviewing Unfair Trade Practices by Online Shopping Mall Operators'
Prohibition of Passing on Promotion Costs... Suppliers Must Prove Voluntary Promotional Events

[Sejong=Asia Economy Reporter Joo Sang-don] From now on, if an online shopping mall operator arbitrarily returns or refunds products to consumers and returns the products to suppliers in a manner different from the return conditions agreed upon in advance with the suppliers, such actions will be considered violations of the law.

The Fair Trade Commission announced that it has finalized the draft of the "Guidelines for Reviewing Unfair Trade Practices by Online Shopping Mall Operators" containing these provisions and will implement it starting February 1.

The newly established guidelines specify standards for major unfair trade practices occurring in the rapidly growing online shopping market, separately from the existing "Act on Fair Transactions in Large Retail Business" guidelines, which were designed assuming offline transactions.

The guidelines clarify the criteria for determining legitimate reasons for returns. Whether a return qualifies as a "legitimate reason" is to be judged comprehensively by considering ▲whether there was prior agreement with the supplier and the content of that agreement ▲the form and characteristics of the supply transaction ▲the intention and purpose of the return ▲the effects of the return on the supplier.

It also clearly states that the burden of proving the legitimacy of the return lies with the online shopping mall operator.

Passing on the burden of promotional costs is also considered a violation of the law. Since promotional events are frequently held in online shopping malls, and entering into individual agreements each time involves high transaction costs, the guidelines allow for a single written bulk agreement within a reasonably predictable period (e.g., once per quarter). However, mandatory statutory agreement contents (such as product lists, cost scale, and cost-sharing ratios) must be separately specified for each promotional event. It is clarified that promotional costs are calculated by summing expenditures incurred during the event and lost revenue.

Voluntariness is generally recognized when the supplier independently plans the promotional event first and requests it to the online shopping mall operator. However, as an exception, the guidelines note that voluntariness may still be recognized if the online shopping mall operator planned or notified the promotional event to the supplier or if both parties consulted about the event. Through specific examples, it is also stated that voluntariness and distinctiveness may be recognized when promotional events are conducted through open recruitment.

The provision related to the prohibition of passing on promotional cost burdens in the draft guidelines will be enforced from January 1, 2022, when the application of the promotional event guidelines ends.

Disadvantageous acts are to be judged comprehensively by considering the content and degree of disadvantage, the continuity and dependency of the transaction relationship, and normal trade practices. Legitimate reasons are to be judged by considering prior agreement with the supplier, reasons and purposes of the disadvantageous acts, and the content and degree of such acts.

A Fair Trade Commission official stated, "Going forward, the Fair Trade Commission will continue monitoring unfair trade practices in the online shopping mall market," and added, "We also plan to promote policy efforts to help online shopping mall operators voluntarily establish a culture of fair trade order."

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