Political Affairs Committee Criticizes Financial Authorities... Could Have Prevented 'Merge Point' Damage

Revised Bill to Strengthen Online Platform Responsibility Stalled in National Assembly
Discussion Schedule Delayed, Has Yet to Reach Plenary Session
Legislative Action Could Have Minimized Damage from MergePoint Scandal

[Asia Economy Reporter Song Seung-seop] It has been confirmed that bills that could have prevented the Merge Point incident were blocked by partisan conflicts and were not even brought to the committee for consideration. Among the regulated targets were e-commerce companies that mediated the sale of Merge Points. The National Assembly, which criticized the financial authorities for poor management and supervision, neglected its primary role of handling livelihood-related bills, thus failing to prevent consumer damage.

According to related industries on the 23rd, earlier this year, the Fair Trade Commission pushed for a complete revision of the "Act on Consumer Protection in Electronic Commerce (Electronic Commerce Act)." The main point was to strengthen responsibility so that online platforms, including e-commerce companies, cannot evade responsibility by claiming they merely mediated sales. Online platforms must quickly identify the causes and damages when consumer harm occurs and bear joint responsibility together with tenant companies.

The government’s push for the bill was driven by the surge in consumer damage resulting from online platform transactions. According to the Korea Consumer Agency, the number of online transaction damage relief applications, which was only 10,331 in 2016, increased to 16,974 by the end of last year. During the same period, the number of electronic commerce-related consultations at the 1372 Consumer Counseling Center under the Fair Trade Commission surged from 142,327 to 214,872.

The government and consumer groups predicted that the passage of the bill would provide stronger protection for consumers. At the time, Fair Trade Commission Chairman Cho Sung-wook explained, "If the platform is found to have intentional or negligent fault, it will compensate, and if not, it can exercise subrogation rights against tenant companies," adding, "Consumer damage will be significantly reduced." Kang Jung-hwa, president of the Korea Consumer Federation, also said at a National Assembly public hearing last month, "If the amendment creates an obligation to cooperate in damage handling, it will prevent situations where platform companies take no action."

Many analyses suggest that if the bill had passed, the Merge Point damage could have been prevented. This is because the responsibility of e-commerce companies such as TMON, 11st, and WEMAKEPRICE, which earned commissions through sales mediation, would have been strengthened. Currently, these companies claim no responsibility as intermediaries. Under current law, if intermediaries inform consumers of their intermediary status, they are effectively not responsible for consumer damage. Some companies have subrogation claim provisions but do not enforce them. There is also no significant damage investigation or announcement.

Repeated Delays in Bill Processing... "Backdated Administration Must Be Eradicated"

Nevertheless, most related bills submitted to the National Assembly’s Political Affairs Committee are effectively stalled. When the Fair Trade Commission pushed the bill, it predicted in response to media criticism that "it will be submitted to the National Assembly by June," and expected that "many lawmakers showed interest, so it will pass the National Assembly soon." However, among the five bills currently proposed, four have not even been brought to the committee. Only the bill led by Democratic Party lawmaker Yoon Kwan-seok was submitted to the committee on June 22, but it still has a long way to go before passage.

In the Political Affairs Committee, the bill processing schedule has repeatedly been delayed due to partisan differences. From March to April, attention was focused solely on the "Public Officials Conflict of Interest Prevention Act" due to real estate speculation allegations involving LH employees. The Anti-Corruption and Civil Rights Commission faced repeated disruptions amid controversies over political neutrality violations. From May to June, conflicts arose among the ruling and opposition parties, the Financial Services Commission, and the Bank of Korea over the "Electronic Financial Transactions Act (EFTA) amendment." This is why the Political Affairs Committee, which criticized the Financial Services Commission over the Merge incident, is also being held responsible for failing to promptly process legislation.

On the 20th, both ruling and opposition parties jointly condemned the financial authorities at the National Assembly’s Political Affairs Committee plenary session. Lawmaker Kim Byung-wook criticized, "The financial authorities’ response that they cannot manage or supervise because (Merge Point) is an unregistered business activity is an irresponsible statement that no citizen can understand." Lawmaker Kang Min-guk also questioned, "Can the public accept that the financial authorities are not even aware of a prepaid payment business operator with cumulative issuance worth about 100 billion won?"

Experts pointed out that the National Assembly’s "closing the stable after losing the cow" approach must be eradicated. Professor Kim Dae-jong of Sejong University’s Department of Business Administration emphasized, "There has been a lot of damage caused by backdated administration," and added, "Efforts to prevent damage through legislation in line with the changing environment before damage occurs are necessary."

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