A man in his 60s makes extreme choice after used car false listings and forced sales
"Please eradicate used car fraud" 청 국민청원 also
Many loopholes including unclear dealer scope and exclusion from punishment rules
Experts say "Consumer trust must be raised by large companies entering the used car market"
A used car market in Seoul. The photo is unrelated to specific expressions in the article. [Image source=Yonhap News]
[Asia Economy Reporter Kim Choyoung] "How can this be the price of a used car?"
As it was revealed that a man in his 60s was deceived by a used car sales scam group, forced to buy a car, and subsequently took his own life, public opinion is growing for a large-scale crackdown on the used car market, where false listings and various threats and scams run rampant. Appeals to prevent used car fraud have also been posted on the Blue House's national petition board. Experts have suggested the need for large corporations to enter the used car market.
The Chungbuk Provincial Police Agency announced on the 11th of last month that they arrested four people, including A (24), who forcibly sold used cars using false listings as bait, and booked 22 others without detention. They are accused of posting false listings online at prices lower than market value to lure the victim, a man in his 60s named B, and then forcibly selling cars with much poorer performance than those posted online at prices higher than market value.
From December last year for about three months, they systematically divided roles such as team leader, telemarketer, dispatch team, and false dealers to carry out used car sales scams, reportedly obtaining unfair profits worth about 600 million KRW from around 50 victims.
A petition urging the eradication of used car fraud posted on the Blue House National Petition Board on the 13th of last month. Photo by Blue House National Petition Board screenshot
The method of forcibly selling used cars using false listings as bait is considered a chronic problem in the used car market. According to a survey conducted by the Citizens' Coalition for Consumer Sovereignty in April through Hangil Research, targeting 1,000 adult men and women nationwide, 54.4% of respondents identified 'false or bait listings' as the biggest problem in the used car sales market.
In June last year, Gyeonggi Province investigated 31 major used car sales websites frequently visited by consumers, suspected of having false listings, and found that 95% of the listings were actually false and not available for purchase, causing public outrage.
Under the current Automobile Management Act, used car sellers must transfer ownership under the company name and officially register the vehicle as a commercial used car. However, only 4.8% of vehicles were officially registered as commercial used cars. The average listed sale price on websites was 2.8 times higher than the actual acquisition cost, and the mileage often showed a 4.8-fold difference from the actual mileage.
The reason false listings persist is attributed to weak punishment provisions. The current Automobile Management Act prohibits false or exaggerated advertising by car dealers. However, when false or exaggerated advertising is conducted by employing intermediaries such as brokers or dealers, proper punishment is not enforced, leading to ongoing calls to clearly define the scope of used car dealers. Some sites disclaim any responsibility for product information or sales processes under the pretext of being communication sales intermediaries.
Citizens express frustration, pointing out that the used car market is not trustworthy. Kim, a company employee in his 40s who recently looked into buying a used car, said, "While some parts of the used car market are legitimate, there are cases where they even threaten and forcibly sell cars." He added, "Whether to buy a car or not is the consumer's right, but this is excessive."
There are also criticisms that forcibly selling products or services that consumers did not request is excluded from punishment regulations, making it difficult for dealers to have a sense of caution. The current law prohibits forced sales by automobile management businesses but does not apply penalties. Therefore, even if forced sales are detected, offenders are only prosecuted under laws related to violent acts (joint coercion) or extortion.
In response, lawmakers have proposed amendments to the Automobile Management Act to expand the scope of car dealers and remove clauses excluding forced sales from punishment regulations. The amendment is currently pending in committee.
Some voices call for allowing large corporations to enter the used car market to address these issues. The used car sales business has been designated as a small and medium-sized enterprise (SME) suitable industry since 2013, restricting new entries and expansions by large corporations. However, as cases of victims of used car sales scams have continued, some consumers have argued that large corporations should be allowed to enter the used car market to ensure transparency and fairness. The closed structure of the used car market has been criticized for enabling false listings and various illegal practices.
A survey also showed that large corporation entry could increase transparency in the used car market. In April, the Citizens' Coalition for Consumer Sovereignty commissioned Hangil Research to survey 254 experts, and 79.9% responded positively to the entry of complete car manufacturers into the used car sales market. They cited reasons such as "making the used car market transparent and advanced (71.4%)" and "expanding consumer choice for various products and services (56.7%)."
Experts suggest allowing large corporations to enter the used car market to solve the problems. Professor Lee Hogun of Daeduk University’s Department of Automotive Studies said, "Despite the used car sales business being designated as an SME suitable industry in 2013 to regulate large corporation entry, problems such as false listings and exaggerated advertising have not been resolved. If large corporations enter and modernize the market, consumer trust can be increased."
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