The aggressive entry of Chinese e-commerce companies into the South Korean market, leveraging ultra-low prices, has raised concerns over their compliance with local laws.
Criticisms are mounting as these firms are accused of frequently making use of advertisements that violate regulations through mobile applications and other digital channels, and showing insensitivity towards personal information breaches.
Reports from the retail sector on February 18 have revealed that Alibaba Group’s AliExpress and Temu have been sending promotional messages, app push notifications, and emails without clearly marking them as advertisements, a practice that goes against South Korean regulations.
Under the Act on Promotion of Information and Communications Network Utilization and Information Protection, etc., any profit-driven promotional information sent via electronic transmission must be clearly marked with the word “advertisement” at the beginning.
Failing to comply with this stipulation can result in a fine of up to 30 million won. There have been instances where local e-commerce businesses faced fines for sending unmarked promotional push notifications.
Furthermore, Temu appears to neglect the mandatory disclosure of app access permissions upon installation and execution, a step that is customarily the first interaction when downloading and running online shopping mall apps.
This disclosure informs users about the necessity of granting permissions for shopping benefits, event notifications, camera access, and location data, among others, with the option for users to choose what to allow. Notably, these permissions are not mandatory for app functionality.
This disclosure requirement is mandated by the Information and Communications Network Act to prevent potential breaches of personal information by restricting indiscriminate access to stored data or pre-set functions on users’ smartphones.
Alibaba Group’s AliExpress and Temu have been sending promotional messages, app push notifications, and emails without clearly marking them as advertisements, a practice that goes against South Korean regulations.
Concerns have been raised within the South Korean retail industry regarding the potential misuse of personal information provided to Chinese sellers on platforms like AliExpress and Temu, which could lead to crimes such as voice phishing.
Besides longstanding controversies over counterfeit goods, these companies are also criticized for selling items that should not be available on online marketplaces, such as medications and weapons that could harm individuals.
The challenge lies in the difficulty of imposing sanctions on these Chinese online marketplaces for violating local laws. The anticipated “Fair Competition Promotion Act for Platforms,” aimed at curbing monopolistic practices by large platform companies, was seen as a potential solution to this legal loophole but has been indefinitely postponed due to industry pushback.
Jung Ji-yeon, Secretary-General of the Consumers Union of Korea, emphasized the lack of legal grounds to regulate illegal business practices by overseas e-commerce operators. She advocated for legislative revisions to prevent and address consumer damages when these companies target South Korean consumers.
The user base for these Chinese e-commerce platforms in South Korea has seen a dramatic increase, with AliExpress and Temu experiencing significant growth. This surge in popularity has been accompanied by a rise in consumer complaints, highlighting issues such as delivery delays, wrong shipments, missing products, and problems with refunds, further underscoring the need for regulatory oversight.
This story was originally published by Ashley Song, via Korea Bizwire.
