Increase in Online Mall Damage Relief Applications... 40% Unable to Receive Compensation

Status of Damage Relief Applications

[Asia Economy Reporter Lim Chun-han] As online transactions have rapidly increased due to the novel coronavirus infection (COVID-19), consumer damages have also been continuously rising.

The Korea Consumer Protection Agency announced on the 24th that a total of 69,452 online transaction-related damage relief applications were received from 2016 to 2020.

By year, the number of cases was 10,331 in 2016, 12,601 in 2017, 13,648 in 2018, 15,898 in 2019, and 16,974 in 2020, showing an increasing trend each year.

Looking at the damage relief applications over the five years by type, contract-related damages such as non-fulfillment of contracts, contract cancellation, termination, and penalties accounted for the largest portion at 63.6% (44,189 cases), followed by quality and after-sales service (AS) related cases at 5.1% (3,544 cases), and safety-related cases at 3.6% (2,499 cases).

In particular, disputes related to nine online platform operators including Naver, 11st, Auction, Wemakeprice, Interpark, Gmarket, Coupang, Kakao, and Tmon accounted for 15.8% (10,947 cases) of all applications. Among disputes involving online platform operators, the rate of consumers receiving damage compensation was only 58.6% (6,420 cases), while 40.8% (4,464 cases) did not receive compensation.

Even in cases where hazardous substances were detected late or consumers experienced health problems after using products, the compensation rate was not high. Among 1,074 damage relief applications related to hazardous goods transactions, 47.6% (511 cases) received compensation through refunds, reimbursements, or exchanges, while 52.1% (560 cases) did not receive compensation due to difficulties in proving damages or loss of contact with sellers.

The damage relief rate in disputes involving online platform operators was relatively low compared to other sectors such as stock investment services (82.8%), clothing and personal items (78.8%), ultra-high-speed internet services (73.0%), telecommunication education services (64.8%), and domestic marriage brokerage (61.9%).

Damage relief applications related to overseas operators also showed an increasing trend with 270 cases in 2016, 215 in 2017, 300 in 2018, 304 in 2019, and 411 in 2020. Among 1,500 cases over five years, 48.2% (723 cases) did not receive compensation due to returned official letters or loss of contact with operators.

The Consumer Agency stated, "It is necessary for platform operators to actively mediate between sellers and consumers and for institutional improvements to support these efforts."