Fair Trade Commission: "Coupang's Broad Exemption Clauses Are Unfair... Terms of Service to Be Corrected"

[Asia Economy Reporter Jusangdon] Coupang's unfair terms that place all liability for damages related to content on the seller will be corrected.

On the 21st, the Fair Trade Commission (FTC) announced that it reviewed not only the terms of use concluded with consumers but also the terms concluded with merchants on Coupang's platform and corrected unfair terms.

Due to the impact of COVID-19, the online distribution market, which was 100 trillion KRW in 2018, is expected to reach 160 trillion KRW this year, showing rapid growth. In particular, Coupang's market share has sharply increased from 4% in 2016 to 13% in 2020.

Coupang introduced the 'Item Winner' system, which, unlike other online distributors, sells the same product under a single representative image and effectively gives the seller who offers the best conditions in terms of price, etc. (the Item Winner) the opportunity to capture almost all sales of that product.

To operate this sales strategy, Coupang includes a clause in the terms concluded with sellers that allows Coupang to freely use the seller's trade name, product images, and other content. Concerns were raised about the unfairness of this clause, prompting the FTC to review it.

The FTC corrected the terms by requiring Coupang to bear appropriate responsibility for damages caused by its intentional or gross negligence in failing to fulfill various obligations required of platform operators under relevant laws, removing clauses that unjustly exempted Coupang from liability. In particular, the clause that made sellers bear all liability for damages related to content despite Coupang's unrestricted use of seller content was deleted, ensuring that Coupang cannot be exempted from its legal responsibilities.

The clause allowing unrestricted use of sellers' and suppliers' content was also corrected. The FTC deleted or modified clauses where Coupang excessively used sellers' content beyond legal limits, reasonably restricting the situational and temporal scope of content use.

An FTC official stated, "We corrected clauses that exempted Coupang from various legal liabilities, including damages arising from disputes on the platform, so that Coupang bears responsibility appropriate to its degree of fault," adding, "We expect that this correction of terms will prevent damages caused by unfair terms to consumers and sellers using Coupang in the future."

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