"Was There No Class Action?"... The Confusion Between Joint Lawsuits and Class Actions [Class Action Introduction] ①

In Korea, Class Actions Are Exceptionally Allowed Only for 'Securities'
Most Consumer Damage Cases Proceed as 'Joint Lawsuits'
Compensation Is Limited to Those Who Participate in the Lawsuit
Weak Incentives for Companies to Compensate in Sm

Yonhap News Agency

"Economic sanctions are so weak that violations are commonplace, and it seems that companies are indifferent even after violations occur. Companies must be made to realize that harming the public could lead to their downfall. Currently, every citizen is a victim, but compensation is only possible if each individual files a lawsuit. The introduction of class action lawsuits should be considered."

This is what President Lee Jaemyung said during the Personal Information Protection Commission's work briefing on December 12. Recently, there have been a series of large-scale personal information leaks by companies such as SK Telecom and Coupang, but it is rare to find cases in Korea where victims have received compensation through lawsuits. This is because the class action system in Korea is only very narrowly allowed for securities-related cases.

A class action lawsuit is a system in which, if some victims file a lawsuit and win, the effect of the ruling is extended to all other victims who did not participate in the lawsuit, allowing them to receive compensation collectively. In Korea, most of the large-scale lawsuits mentioned in consumer damage cases are actually "joint lawsuits," in which only those who filed the lawsuit receive compensation.

Differences Between Joint Lawsuits, Class Actions, and Group Actions

According to the government and legal circles on December 23, the large-scale lawsuits following Coupang's personal information leak are joint lawsuits under the Civil Procedure Act, which differ from class actions. One must be named as a plaintiff in the lawsuit to be covered by the court's ruling. The problem is that in cases where the damages are small, there is little practical benefit compared to the cost, so few people actively participate. Even if the plaintiffs win, the compensation is not significant enough to justify paying high attorney fees and spending years in litigation. This is why the need for class actions is raised every time a large-scale consumer damage incident occurs.

There is also a group action system in Korea, in which people who do not file lawsuits can still benefit from the ruling. However, victims cannot directly be parties to the lawsuit, nor can they receive monetary compensation. The Framework Act on Consumers and the Personal Information Protection Act stipulate that only a third-party organization representing the rights and interests of victims can be a party on their behalf. In addition, claims for damages are not allowed, and lawsuits are limited to seeking prohibition or cessation of rights violations. This means there are clear limitations as a practical means of remedying damages.

In Class Actions, If the Lead Plaintiff Wins, 'All Victims' Receive Compensation

Following Coupang's large-scale personal information leak, calls have grown for the introduction of class actions in the field of personal information infringement. The class action system allows some victims to file a lawsuit, and if they win, the ruling applies to all victims, enabling collective compensation. Countries such as the United States and the United Kingdom have adopted class action systems. In Korea, the class action system has only been implemented in the securities sector since 2005. The "Act on Class Actions in Securities-Related Cases" was enacted in 2005 to efficiently provide relief to those harmed by misleading disclosures, price manipulation, and similar misconduct.

Under the class action system, unless individual victims file a separate exclusion report (opt-out), the effect of the lead plaintiff's lawsuit extends to all members of the group. There is no need to recruit every participant, and a single ruling can provide broad relief. The United States is a country where this opt-out class action system is actively practiced. The U.S. allows class actions in all fields, so companies that lose class actions may face massive compensation or settlement payments, which can undermine management or even lead to bankruptcy. Nevertheless, class actions are recognized as necessary because they have a strong preventive effect, prompting companies to strengthen product safety standards and improve information disclosure, and because they bundle numerous related claims into a single lawsuit, reducing the waste of judicial resources.

Harold Rogers, the new CEO of Coupang, appeared at the hearing on Coupang's breach incident held on December 17 at the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee, responding to lawmakers' questions. 2025.12.17 Photo by Kim Hyunmin

Attempts to Expand Class Actions Beyond Securities Have Always Failed

In Korea, there have been repeated calls to expand the scope of class actions, but these have not resulted in concrete outcomes due to opposition from the business community. After former President Moon Jaein, who pledged to introduce class actions during his 2017 presidential campaign, was elected, then Fair Trade Commission Chairman Kim Sangjo announced plans to pursue their introduction. The Fair Trade Commission presented a work plan calling for class actions in areas such as the Act on Fair Labeling and Advertising and the Product Liability Act. In 2020, the Ministry of Justice also pre-announced legislation to introduce class actions in all fields. In the 22nd National Assembly, several bills have been proposed and are pending, including the "Class Action Lawsuit Act" (sponsored by Assemblywoman Baek Hyeryeon), the "Consumer Class Action Lawsuit Act" (Assemblyman Park Jumin), and the "Personal Information Class Action Lawsuit Act" (Assemblyman Jeon Yonggi), all aiming to introduce class actions for personal information infringement cases affecting consumers.

Of course, even if the class action system is fully implemented, it is unlikely that relief for victims will be efficient and widespread. If the conditions for lawsuits are strictly limited, the practical benefits may be small, and class actions may not be actively pursued. In fact, after the securities class action system was introduced in Korea in 2005, the first case was not filed until 2009. Since then, as of July this year, only about 12 class action cases have been filed, with only 2 resulting in a substantive judgment and 4 ending in court-mediated settlements. Even accounting for population differences, this is a very low number compared to the 211 securities class action cases filed in U.S. federal courts in 2021 alone.

Securities Class Actions: Effectively a 'Six-Tier Appeal System'

In Korea, the requirements for filing a class action are extremely strict. Eligible cases are limited to: ▲misstatements in public offering documents such as securities registration statements; ▲misstatements in disclosure documents for the secondary market, such as business reports; ▲insider trading or price manipulation; and ▲illegal acts by auditors. The requirements to be recognized as a class are also stringent: at least 50 participants, and the total securities held by the group at the time of the act must be at least one ten-thousandth of the total shares issued by the defendant company. In addition, the key legal and factual issues must be common to all members, and it must be proven that a class action is more efficient than individual lawsuits.

Even if these requirements are met, the case does not proceed directly to the merits. Before hearing the complaint, the court first decides whether to grant permission for the class action, and both the permission decision and the merits ruling can be appealed up to three times each. Since companies can immediately appeal and re-appeal the court's decision to permit the lawsuit, it can take years just to determine whether the class action can proceed. In reality, this means the system operates as a "six-tier appeal system."