Foreign e-commerce firms required to name authorized local agents

FTC strengthens regulations on AliExpress, Amazon for customer protection

Foreign e-commerce firms selling goods in Korea will be required to designate authorized agents here, in a regulatory push against Chinese competitors that are drawing a soaring number of customer complaints, according to the country’s antitrust agency, Wednesday.

The Fair Trade Commission (FTC) said it will push for a revision to the local e-commerce act to mandate the foreign platform giants — such as China’s AliExpress and Temu as well as the U.S.’ Amazon and Singapore’s Qoo10 — to assign local agents who can respond promptly to any customer complaints here.

This was aimed at enhancing the safety net for consumers amid the ever-growing influence of foreign e-commerce firms, particularly those from China.

“Customers cannot resolve their complaints after purchasing products from e-commerce companies or sellers that don’t have offices located in Korea,” a FTC official said. “Once the relevant act is revised, foreign retailers will have to designate Korean agents in order to thoroughly fulfill their roles for the protection of local customers.”

The agents will be in charge of dealing with loss relief and resolving disputes.

According to data from the Voice for Consumers, the number of consumer complaints regarding AliExpress reached 465 last year, up 500 percent from the previous year.

The growing complaints are in line with the rapid growth of those platforms. According to data from Statistics Korea, overseas direct purchases in Korea amounted to 6.8 trillion won ($5.17 billion) in 2023, up 5.3 percent from the previous year.

Other data from the market tracker WiseApp showed that the number of domestic AliExpress users reached 8.18 million, rising to become the second-most-influential e-commerce firm after Korea’s Coupang as of February. Temu, another Chinese shopping platform, also reached 5.81 million users during the same period.

The expansion of these foreign e-commerce companies has posed growing threats to local firms such as Gmarket, most of which have been losing influence gradually due to the rapid rise of Chinese rivals.

Other government authorities also teamed up to heighten vigilance on illegal practices of foreign e-commerce platforms.

Under the joint consumer protection measure, the Korea Customs Service will step up monitoring of counterfeit products distributed via foreign direct purchases. The authority will operate tighter monitoring programs against fake products, and notify overseas platform firms of such cases so they can take follow-up actions.

The Ministry of Gender Equality and Family and the Korea Communications Standards Commission will monitor more thoroughly whether the overseas online commerce firms have taken appropriate steps — such as age verification — when selling adult goods. The commission will inspect if they violate any local private information protection acts, and pay particular attention to any mishandling of user data via smartphone apps.

The Korea Consumer Agency is considering establishing a hotline with foreign online platform firms. The agency will receive complaints via its homepage from customers and serve as a mediator between overseas e-commerce firms and local agents, so customers can be compensated more promptly.

“The joint actions by government organizations are also aimed at alleviating concerns over reverse discrimination against Korean platform firms which have abided by relevant local acts,” the FTC official said.