[Overseas Direct Purchase Alert] Consumer Damage Soars Alongside Surge in Transactions

Annual Transaction Volume Increases... Frequent Cancellation and Refund Denials

Overseas Direct Purchase Volume Reached 5.14 Trillion Won Last Year
Damage Surges During Overseas Direct Purchase Peak Season
Many Suspicious Fraud Sites on SNS
Be Wary of Prices That Are Too Low

[Asia Economy Reporters Lim Chun-han and Jeon Jin-young] Recently, as overseas direct purchase transactions have surged, consumer damages such as cancellation/refund refusals and non-delivery/delivery delays have also increased. In particular, it has been found that many damage reports occur during peak overseas direct purchase seasons such as Black Friday.

According to Statistics Korea on the 26th, the scale of domestic overseas direct purchases has been increasing annually, with 3.6355 trillion KRW in 2019, 4.1094 trillion KRW in 2020, and 5.1404 trillion KRW in 2021. In the third quarter of this year, overseas direct purchase amounts reached 1.3065 trillion KRW, a 19% increase compared to the same period last year.

The share of overseas direct purchases by country was led by the United States (36.4%), China (30.4%), and the European Union (EU) (20.1%). By product category, direct purchases increased in clothing and fashion-related products (23.1%), food and beverages (8.8%), and home appliances, electronics, and telecommunications devices (26.4%).

As the scale of overseas direct purchases grows, consumer complaints are also rising. According to the Korea Consumer Agency, the number of consumer consultations related to international transactions reached 15,876 in the third quarter, a sharp increase of 57.6% compared to 10,071 cases in the same period last year. With large-scale global discount events approaching year-end, consumer damages are expected to increase further.

In fact, consumer complaints related to overseas direct purchase online goods received in November and December of 2020 and 2021 totaled 3,230 cases. The most common types of complaints were delays or refusals of cancellations or refunds at 848 cases (26.3%), complaints about penalties, fees, or prices at 631 cases (19.5%), and non-delivery or delivery delays at 615 cases (19%).

By item, clothing and footwear-related complaints were the highest at 1,509 cases (46.7%), followed by IT and home appliances at 366 cases (11.3%), and miscellaneous goods such as wallets, bags, and sunglasses at 325 cases (10.1%). For clothing/footwear and miscellaneous goods, delays or refusals of cancellations or refunds accounted for 434 cases (28.8%) and 99 cases (30.5%), respectively, while in the IT/home appliances sector, complaints about product defects and quality A/S issues were 126 cases (34.4%).

Many damages from suspected scam sites through social networking services (SNS) have also occurred. These scams lure consumers with advertisements claiming large discounts on overseas brand products, then either do not deliver purchased goods or cut off contact with consumers. The number of consumer consultations related to suspected scam sites was 1,171 cases in 2019, 705 cases in 2020, and 668 cases in 2021. By product category, fashion-related items such as clothing and footwear (37.8%) and bags and sunglasses (18%) accounted for more than half.

Monthly reports of suspected scam site damages show that nearly half (47.7%) occurred between November and January, when global discount events like Guanggunjie, Black Friday, and Boxing Day take place. Additionally, 13.6% of cases were reported in May and June, when outdoor activities increase. From February to May and August to October, clothing-related damages were most frequently reported; in January, footwear-related damages were common; and in June and July, damages related to glasses and sunglasses were frequent. Diet products were the most reported damage items in November and December.

The most common type of damage from suspected scam sites was delays or refusals of cancellation and refund requests, accounting for 57.8%. An analysis of 1,632 cases with confirmed access routes showed that 66.7% accessed the sites through SNS advertisements such as Instagram or Facebook. Cases of directly searching for brand names or product categories to access the sites are also increasing annually.

The Korea Consumer Agency advised, "To prevent damages from overseas direct purchases, consumers should be cautious of sites selling products at excessively low prices. When purchasing from sites accessed through SNS advertisements, it is advisable to check whether the site is a suspected scam site on the International Transaction Consumer Portal."