KCCI Opposes Easing Requirements for Consumer Group Lawsuits

[Asia Economy Reporter Changhwan Lee] The Korea Employers Federation announced on the 26th that it has submitted opposing opinions to the Fair Trade Commission (FTC) regarding the main contents of the proposed amendments to the Consumer Basic Act announced for legislative notice by the FTC.

The FTC is promoting the relaxation of requirements for filing consumer group lawsuits by introducing a preventive injunction right and abolishing the court's lawsuit permission procedure.

The Employers Federation emphasized that allowing preventive injunctions, which enable lawsuits based solely on the expectation of significant infringement of consumer rights, and abolishing the permission procedure for prior examination of the necessity of lawsuits, could lead to indiscriminate lawsuit proliferation and abuse of the system such as planned lawsuits through consumer groups.

In a situation where critical opinions about products and services easily spread as public opinion through black consumers or online platforms, if group lawsuits are possible merely due to concerns about consumer damage, businesses could suffer enormous losses due to the proliferation of lawsuits.

In particular, it added that if a provisional injunction (preservation order) applied for together with the lawsuit is granted, production and sales of products could be suspended until the lawsuit is concluded, and there are concerns about damage to businesses such as loss of trust in the company externally.

Since a significant portion of consumer-related disputes involve products and services of small and medium-sized enterprises (SMEs), there is also concern that if the requirements for filing lawsuits are relaxed in the future, the damage to SMEs, which have weaker lawsuit response capabilities, could increase.

Accordingly, the Employers Federation presented the opinion that it is more desirable to supplement the current system rather than introducing a 'preventive injunction right' or abolishing the 'lawsuit permission procedure.'

The Employers Federation also argued that regarding the newly established obligation for businesses to submit materials for the FTC's fact-finding investigations, frequent investigations would increase the burden on businesses to submit materials, which could ultimately lead to concerns about leakage of trade secrets and damage to corporate image.

The amendment virtually establishes a fact-finding investigation system that the FTC can conduct at any time and imposes an obligation on businesses to submit necessary materials for this, raising concerns that the burden could become excessively large.

Hahm Sang-woo, head of the Economic Research Headquarters at the Employers Federation, said, "The introduction of preventive injunction rights and relaxation of requirements for filing consumer group lawsuits will further increase our companies' anxiety about various lawsuits," adding, "It is preferable to supplement the current system rather than relax the requirements for filing lawsuits, and even if the requirements are inevitably relaxed, supplementary measures should be prepared to prevent abuse of consumer group lawsuits."

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