Consumer Protection Act on Electronic Transaction

Enacted by Law No. 6687 , Mar 30, 2002

Chapter 1 General Provision

Article 1 Purpose The purpose of this Act is to protect the interests of consumers by ensuring a fair transaction related to sales of goods and services by means of e-commerce and distant selling, and to contribute to sound national economic development by enhancing market confidence.

Article 2 Definitions For the purpose of this act,

1. The term “E-commerce” means to carry out commercial activities by means of electronic transactions (E-commerce means the electronic transaction under the provisions of the Paragraph 5 Article 2 of the Electronic Transaction Act; hereinafter the same) 2. The term “distant selling” means to provide information on sales of goods and services (including rights to use facilities or to have services provided: hereinafter, the same) by means of mail, telecommunications and other means as prescribed under the Ordinance of the Prime Minister, and to sell goods and services (hereinafter referred to as “goods and etc.”) after receiving an offer of contract from a consumer. However, telemarketing under the provisions of Paragraph3 Article2 of the Door-to-Door sales, etc. Act will be excluded. 3. The term “distant seller” means a person who undertakes distant order sales as his business or who carries out the distant selling in accordance with contracts as his business. 4. The term “distant distributor” means to allow the usage of cyber mall (the cyber business place sets to make transaction of goods and services by means of IT equipment, such as computer: hereinafter the same), or to undertake sales and transaction between stakeholders by means as prescribed under the Ordinance of the Prime Minister. 5. The term “consumer” means those who use goods and services provided by

1 enterprises or trade associations, or those as prescribed under the Presidential Decree.

Article 3 Exclusion of Application

(1) Provisions under this Act do not apply to the transactions that businessman is doing for commercial activities. (Excluding multilevel distributor on Paragraph6 Article2 of the Door-to-Door Sales, etc. Act). Although he is a businessman, this will be applied when he, as a consumer, deals with other consumer on the same transaction conditions.

(2) Regulations on the contents of contract on Paragraph 2 Article 13 and obligations of sending the document under the provisions of Paragraph1 Article 16 shall not apply to the following transactions. However, in case of Subparagraph 1, the paper or documents of the contents of contract can be changed by means as prescribed under the Ordinance of Prime Minister.

1. Transactions as prescribed under the Ordinance of the Prime Minister, the frequent transaction in accordance with previously recognized subcontracts or regularized transactions. 2. Transaction, which has other means to distribute contract as prescribed in other laws (excluding the civil law and the Door-to-Door Sales etc. Act)

(3) Distant distributor who mediates communication sales between those who are not distant sellers will not be applied from Article 13 to Article 19.

(4) Securities transaction by securities companies on Paragraph 9 Article 2 of the Securities and Exchange Act, transaction of financial products done by financial institutions set by the Presidential Decree, and transaction to sell commodities and food in surrounding area shall not be fallen under the regulations from Article 12 to Article 20.

Article 4 Relations with Other Acts

If the provisions under this Act concur in the other Acts as well regarding consumer protection on e-commerce and distant-selling, this Act shall take precedence to other Acts. However, if appliance of other Act gives more advantages to consumers, the said

2 Act shall be applied.

Chapter 2 E-Commerce and Distant Selling

Article 5 Usage of Digital Documents

(1) Despite provisions under Article 6 Paragraph 2 Subparagraph 2 of the Electronic Transaction Act, if the businessman did not send the digital documents (the documents under the provisions of Paragraph 1 Article 2 of the Electronics Transaction Act) to the designated address (the information processing system of Paragraph 2 Article 2 of the Electronic Transaction Act) after agreeing with consumers to transact via digital document beforehand, the said businessman shall not claim his rights over the concerned document. However, this shall not apply to the case determined by the Presidential Decree such as the following cases; when the document is required in urgency; when consumers already expect that the deal will be traded via digital document; and when consumers print out the digital documents.

(2) The businessman shall notify consumers of the necessary procedures and measures for securing the validity and acceptance of the concerned document in accordance with the provisions set by the Presidential Decree, if he wants to use the digital document with digital-signature (digital-signature under the provisions of Paragraph 2 Article 2 of Digital Signature Act).

(3) In using the digital documents, the businessman shall not force consumers to use a certain type of digital signature (including de facto enforcement used by means of using special standards and etc.) He shall not unduly restrict consumers’ usage of digital signature.

Article 6 Reserving the Transaction Record

(1) The businessman shall reserve the record on transaction including labeling, advertising and contents of contract in e-commerce and distant-selling. In this case, he shall provide the method for consumers to easily search and get the transaction records. (2) The transaction record and related private information (confined to the information

3 that can identify the entity of transaction, such as name, address and ID number) that the businessman shall reserve under the provisions of Paragraph 1 shall be reserved, despite the provisions of Paragraph 3 Article 30 of the Act on Promotion of Utilization of Information & Communications Network even when consumers withdraw their agreement on using private information.

(3) Under the provisions of Paragraph 1, target, scope and period of transaction records and methods for consumers to read and preserve the regarding information shall be determined by the Presidential Decree.

Article 7 Prevention of Errors

In order to prevent any damage arising from mistakes of expressing intentions done by consumers, businessman shall set up the process necessary to confirm and change the contents before the period to impose transaction fund and offer.

Article 8 Securing Confidence of Electronic Payment

(1) When the businessman use the payment method via electronic tool (hereinafter “the electronic payment”) set by the Presidential Decree, the concerned parties of electronic payment determined by the Presidential Decree, such as the businessman, the issuer of e-payment and e-settlement service provider (hereinafter “the e-settler”) shall take measures to maintain security of related information.

(2) In case of carrying out e-payment, businessman and e-settler shall take cautious approach in confirming whether the information inserted by consumers clearly reflects consumers’ true intention.

(3) In case of carrying out e-payment, businessman and e-settler shall notify the fact to consumers in accordance with the methods prescribed under the Ordinance of Prime Minister, such as sending e-document. They shall let the information and data related to e-payment easily seen and accessed by consumers anytime.

(4) The e-settler who issues e-settlement methods used in majority of cyber malls determined by the Presidential Decree, shall notify or mark things to take notice, such as restrictions in usage, things related to consumer confidence to the concerned payment

4 method prescribed under the Ordinance of Prime Minister.

(5) If there is any conflict or struggle related to e-payment between businessman and consumers, the e-settler shall cooperate to address the said conflict in accordance with the Presidential Decree, such as permitting consumers to see the payment related information.

Article 9 Cooperation with Distributors

The party who run business related to delivering [including the delivery via communication network of Paragraph 1 Article 2 of the Act on Promotion of Utilization of Information and Communication Network. Hereinafter “communication network”] goods and services arising from e-commerce and distant-selling shall cooperate to address the concerned conflict in accordance with the Presidential Decree, when the conflicts related to accident and damages in the delivery process arise.

Article 10 Management of Cyber Mall

(1) The person who manages cyber-mall for e-commerce shall mark the following elements as prescribed under the Ordinance of Prime Minister for consumers to easily identify the businessman. 1. Trade name and name of representing director 2. Address of business office (including the address which handles consumer complaints) 3. Phone number, fax number, mail address 4. Business registration number 5. Terms and conditions of usage of cyber mall 6. Other things prescribed under the Presidential Decree, which aim to protect consumers 7. Operator who runs cyber mall under the provisions of Paragraph1 shall cooperate to take corrective measures about the sectors that the said operator shall be in charge of, if there is any violation in the concerned cyber mall.

Article 11 Usage of Consumer Information

(1) When the businessman wants to collect or use consumer information for e-

5 commerce or distant selling(including the case to provide information to the third party. Hereinafter the same), the said businessman shall fairly collect or use the information under the provisions of the Act on Promotion of Utilization of Information and Communication Network.

(2) In handling goods and services, the businessman shall take necessary measure set by the Presidential Decree to confirm the self-authentication and damage compensation, if there is any damage of property or possibility of property damage by abusing private information.

Article 12 Notification of Distant Seller

(1) Distant seller shall notify each of the followings set by the Presidential Decree to the Fair Trade Commission or the Mayor/Province Governor. However, this shall not apply to the case of distant-seller prescribed by the Presidential Decree, such as small-scale distant-seller.

1. Trade name (in case of corporation, the name and ID number of representing director shall be included), address and phone number 2. E-mail address, the Internet domain and host server address 3. Other necessary elements for confirming identification of businessman prescribed by the Presidential Decree.

(2) When the distant seller wants to change the notification under the provisions of Paragraph 1, he/she shall notify this in accordance with the Presidential Decree.

(3) If distant seller wants to suspend, shut down or resume the business, he/she who notified under the provisions of Paragraph 1, notifies this fact in accordance with the Presidential Decree.

(4) The Fair Trade Commission can notify the information of distant seller under the provisions of Paragraph 1 determined by the Presidential Decree.

Article 13 Providing information on identification and terms of transaction

(1) When the distant seller carries out labeling and advertising to get an offer on

6 transaction of goods and services, he/she shall include each of the followings.

1. Trade name and name of representing director 2. Address, phone number and E-mail address 3. Notification number of distant-selling business under the provisions of Article 12

(2) In order to help consumers to clearly understand terms and conditions of transactions before signing a contract, and carry out the contract without any error, distant seller shall mark, advertise and notify each of the following sectors in an appropriate way, and distribute the supplying documents on the contents of contract containing each of the followings. However, for rapid transaction, if there is an approval from consumers, it can be replaced by the e-documents or written document under the provisions of Article 16.

1. Lists about suppliers and sellers of goods and etc. 2. Name, kinds and contents of goods and etc. 3. Price (if the price is not set, mention the specific way to set the pricing), the payment methods and its period 4. When and how to supply goods and etc. 5. Period, way to apply and effects (including the official form needed to exercise the rights of withdrawal of offer) of withdrawal of offer and cancellation of contract (hereinafter “the withdrawal and etc.”) 6. Exchange, refund and guarantee of goods and etc., terms and conditions of refund 7. The required technical issues related to sending and installing the goods and etc. that can be provided via the Internet (digital media). 8. Issues related to addressing consumers complaints over goods and etc., consumers damage compensation and the conflict between consumers and businessman. 9. Terms and conditions over transaction 10.Terms for transaction, which affects consumers’ judgment and other things needed to compensate consumer damage prescribed under the Presidential Decree.

(3) The Fair Trade Commission shall set and notify the lists regarding the trade name of distant seller under the provisions of Paragraph 1 and 2, and the ways to label, advertise and notify the terms and conditions of transaction. In this case, considering the characteristics of transaction and goods, the way to label, advertise and notify shall be different.

7 (4) In accordance with the provisions of Paragraph 2, distant seller shall sincerely comply with terms and conditions of transaction labeled, advertised or notified to consumers.

Article 14 Confirmation of Offer

(1) When the distant seller gets offer on transaction of goods and etc. from consumers, information on confirming the reception of offer, and availability of sales shall be promptly delivered to consumers.

(2) Distant seller shall set up the appropriate procedure for consumers to confirm, revise and cancel the contents of offer, before signing the contract.

Article 15 Supply goods and etc.

(1) Distant sellers shall take necessary measures to supply goods and etc. within seven days from the time when consumers gave the offer. When a distant seller receives all or just part of payment of goods and etc.(hereinafter referred to as the “prepaid distant selling”), he/she shall take necessary measures to supply goods and etc. within 2 business days. However, if there is separate agreement over the period to supply goods and etc., this shall not be applied.

(2) When a distant seller realizes that it is hard to deliver goods and etc., he/she shall notify consumers of the reasons without delay. In case of prepaid selling, he/she shall take necessary measures for refund within 2 business days from getting the payment.

(3) Distant sellers shall take appropriate measures for consumers to confirm the supply process and procedure of goods and etc. In this case, the Fair Trade Commission shall set and notify the necessary measures.

(4) Provisions of Paragraph 1 or 5 of Article 18 shall apply mutatis-mutandis to the case of prepaid distant selling in Paragraph 2 when refund or necessary measures are required.

Article 16 Delivery of Written Document

8 (1) When distant sellers supply goods and etc. in accordance with the offer given by consumers, written document containing the contents (hereinafter “the written document”) shall be delivered to consumers by attaching them with goods and etc.

(2) If goods and etc. sold by distant sellers are intangible goods such as software that can be delivered by electronic communication equipment under the provisions of Paragraph 2 Article 2 of Electronic Communication Basic Act, the written documents shall be delivered via the electronic tool. (3) In case of withdrawing the offer by consumers under the provisions of Article 17 and each following of Paragraph 1 and 2 of Article 13, the necessary form shall be included in the written document.

Article 17 Withdrawal of the Agreement

(1) In case of signing the offer about the purchasing of goods and etc. with distant sellers, consumers can withdraw the offer on agreement only within the following period (if the concerned parties agree to set their own period, it refers to that period).

1. 7 days from the day they receive written documents on the contents of contract under the provisions of Paragraph 2 Article 13. However, if the supply of goods and etc. gets delayed, it becomes 7 days since goods and etc. are supplied or supply is launched. 2. If consumers do not receive any written document on the contract under the provisions of Paragraph 2 Article 13, if they receive written document which does not mark address of distant sellers, or if they cannot withdraw their offer within the period based on Paragraph 1 due to changes of address of distant sellers, it becomes 7 days since the time they know or could know the changed address.

(2) In case of falling under at least one of the following lists, consumers shall not withdraw the agreement under the provisions of Paragraph 1.

1. If goods and etc. are damaged or abolished, due to consumer’s carelessness. However, it is not applied when consumers tore package and covers to confirm the contents of goods and etc. 2. If the value of goods and etc. has weakened dramatically due to usage and

9 consumption of consumers (this is confined to the case when distant sellers take action under the provisions of Paragraph 6) 3. When the value of goods and etc. is lowered to the extent that reselling is impossible with the passage of time. 4. When the package of goods and etc. which are reproducible is damaged 5. Other cases set by the Presidential Decree for the safety of transaction

(3) Despite provisions of Paragraph 1 and 2, when the contents of goods and etc. are different from those of labeling and advertising, consumers shall withdraw their offer within 3 months from receiving the goods, or within 30 days from the day they know or could know the fact.

(4) When the withdrawal of offer under the provisions of Paragraph 1 or 3 is done by written documents, it becomes effective since the day from sending the written document.

(5) In applying the provisions of Paragraph 1 or 3, if there is any conflict regarding the facts and period of contract, supply of goods, sending the written documents, and whether consumers have any responsibility over damage of goods, distant sellers shall give proof.

(6) In case of goods which are hard to be withdrawn from the offer under the provisions of Subparagraph 2 Paragraph 2, distant sellers shall mark the facts to the package or other parts that can be easily catched from consumers. Or as a part of supplying pilot products, measures that exercising the rights of withdrawal of offer shall not be hampered shall be taken.

Article 18 Effects of withdrawing the offer

(1) If consumers withdraw the offer under the provisions of Paragraph 1 or 3 of Article 17, they shall return the supplied goods.

(2) Distant sellers (including the person who received the payment of goods and etc. from consumers or strike a contract with consumers over distant selling. Hereinafter the same as Paragraph 10) shall reimburse the payment of goods and etc. already paid within 3 business days since goods and etc. are refunded. If distant sellers delay the

10 reimbursement of payment of goods and etc. to consumers, they shall provide consumers with the delayed interests calculated by multiplying delayed interest rates (hereinafter “the delayed compensation fund”) prescribed under the Notification set by the KFTC.

(3) In reimbursing the payment of goods and etc. under the provisions of Paragraph 1 and 2, when consumers pay the price of goods and etc. as a settlement tool set by Presidential Decree, such as credit card, under the provisions of Paragraph 3 Article 2 of Credit Specialized Financial Business Act, distant sellers shall ask e-settlers to suspend or cancel the request of payment over goods and etc. However, when distant sellers already received the payment of goods and etc. from e-settlers, it shall be reimbursed without delay. The fact shall be notified to consumers.

(4) The e-settler who got reimbursed the price of goods and etc. from distant sellers under the provisions of Paragraph 3, he/she shall, without delay, reimburse or take necessary measures for reimbursement.

(5) Distant sellers categorized under the provisions of Paragraph3 shall pay the compensation arising from delay to consumers if consumers had to pay the price due to the delay of reimbursement.

(6) If distant sellers do not reimburse the payment to e-settler without any justifiable reason despite the provisions of Paragraph 3, consumers shall ask e-settler to combine this with other debt about the price amount that should be reimbursed. In this case, e- settler shall combine this debt with other debts over distant-sellers in accordance with the Presidential Decree.

(7) If e-settlers do not act diligently about the counter surveillance of provisions of Paragraph 6, they can deny the settlement of payment. In this case, distant sellers and e- settlers shall not take any action which give some negative impact on consumers such as regarding them as credit delinquents under Article 2 Paragraph 7 of the Use and Protection of Credit Information Act.

(8) In case of Paragraph 1, distant sellers shall claim the payment of the amount set by the Presidential Decree to consumers, which amounts to the benefits that consumers get and the costs that are consumed for goods and etc.

11 (9) In case of withdrawing the offer under the provisions of Paragraph 1 Article 17, costs required to return supplied goods shall be paid by consumers. Distant sellers shall not ask consumers for damage compensation or the costs amount for withdrawing the offer.

(9) In case of withdrawing the offer under the provisions of Paragraph 3 Article 17, costs required to return the goods and etc. shall be born by distant sellers.

(10) Distant sellers, the person who received the payment of goods and etc. and the person who strikes a contract with consumers regarding distant selling shall take responsibility in reimbursing the payment of goods and etc. under the provisions of Paragraph 1 or 7 which follow the provisions of Paragraph 1 and 3 of Article 17, if the said persons are not the same one.

Article 19 Restriction of the amount for damage compensation

(1) When contract on selling goods and etc. is withdrawn due to the faults from consumers, the amount of compensation requested to consumers by distant sellers shall not exceed the amount surpassing the delayed compensation arising from the payment overdue.

1. If the supplied goods and etc are returned, the largest amount among those categorized under following sectors shall be paid. a. The amount for using returned goods and etc. or the amount arising from the benefits from its usage b. The amount deducted from the price when the goods and etc. are returned.

2. If the supplied goods and etc. are not returned, the amount reaching to the selling price of goods and etc.

(2) The Fair Trade Commission shall establish and notify the standards to set the amount of damage compensation under the provisions of Paragraph 1, in order to settle the disputes arising from the claim for damage compensation raised by consumers and distant sellers.

12 Article 20 Responsibility of distant distributors

(1) When the person who asks for intermediating distant selling sell goods and etc. undertaking the intermediary role without stipulating that he/she is not responsible for selling, distant sellers shall take co-responsibility over property damages to consumers arising from intention or mistakes done by distant distributors.

(2) Despite the notification under the provisions of Paragraph 1, distant distributors who undertake distant-selling cannot avoid the responsibility of distant sellers under the provisions of Article 12 or 18. However, in case of getting the offer from distant-sellers, striking a contract that distant seller takes responsibility, distant distributors shall not be held accountable.

(3) The businessman who asked to intermediate distant-selling to distributors shall not be intact from responsibility over the property damage of consumers arising from intention or mistakes done by distant distributors. However, if the businessman pays a lot of attention not to give any damage to consumers, their responsibility can be waived.

(4) Distant distributors shall provide consumers with the ways to search information on identification of the businessman who gave the offer. If the person who asked the offer is not the businessman, the ways to find the information on the counterpart of transaction on the lists determined by the Presidential Decree such as address and phone number shall be provided to the participants of transaction.

Article 21 Prohibitions

(1) Businessman or distant sellers who are doing e-commerce shall not act any of following lists.

1. Acts and behavior, informing wrong or exaggerated information to consumers, luring consumers by using deceptive methods, or hampering the withdrawal of contract. 2. Acts and behavior, changing or eliminating address, phone number, Internet domain in order to prevent the withdrawal of offer. 3. Acts and behavior, giving damage to consumers by not addressing the deficit of human resources or equipment needed for dispute or complaint settlement for a

13 certain period of time. 4. Acts and behavior, supplying goods and etc, and ask for payment, even though consumers did not ask any offer. 5. Acts and behavior, enforcing consumers to get services or purchase their products via phone, fax and the Internet, even though consumers told them they do not want any. 6. Acts and behavior, using consumers’ private information without their approval, or beyond the extent of approval. However, any case, which falls under each of the followings is exception. a. The case set by the Presidential Decree which is inevitable in implementing the contract with consumers, such as delivering goods and etc. b. The case necessary for settlement arising from transaction of goods and etc. c. The case set by the Presidential Decree which is required for confirming identification in order to prevent any abuse. d. Any inevitable case set by the provisions of Act.

(2) The Fair Trade Commission shall set and notify the standards that businessman and distant sellers of e-commerce shall comply with.

Article 22 Handling tasks such as withdrawing the offer during non-business days and etc.

(1) During the non-business days or the period of business suspension, the tasks regarding the withdrawal of offer under the provisions of Paragraph 1 and 3 of Article 17 and those related to the withdrawals of contract under the provisions of Paragraph 1 and 5 of Article 18 and consequent reimbursement of payment shall be continued.

(2) If distant seller is deemed to be incapable of running business, such as getting the adjudication of bankruptcy without reporting the cessation of business, the Fair Trade Commission or the Mayor/Province Governor informed under the provisions of Paragraph 1 Article 12 shall withdraw such report in virtue of the office.

Chapter 3 Consumer Protection Article 23 Setting the Consumer Protection Guidelines in E-Commerce and

14 etc.

(1) In order to build fair trade rule and protect consumers in e-commerce or distant- selling, the Fair Trade Commission or the FTC shall set the guidelines to encourage self-disciplined compliance (hereinafter “Consumer Protection Guidelines”) by listening to the opinions from the concerned party, institutions and groups.

(2) If the adhesion contract of business gives more disadvantages to consumers that the contents of consumer protection guidelines, the concerned party shall clearly express or notify consumers of the adhesion contract.

Article 24 Consumer Damage Compensation Insurance Contract and etc.

(1) In order to protect consumers in e-commerce or distant-selling, the FTC shall encourage the concerned party to strike the following contract(hereinafter the “Consumer Damage Compensation Insurance Contract and etc”). However, the issuer of e-payment tool under the provisions of Paragraph 4 Article 8 shall strike the Consumer Damage Compensation Insurance Contract and etc.

1. Insurance Contract based on the Insurance Law 2. Debt Payment Guarantee Contract with Financial Institutions to secure the payment of consumer damage compensation (2) The Consumer Damage Compensation Insurance Contract and etc. shall be appropriate enough to secure the confidence of e-payment issuer under the provisions of Paragraph 4 Article 8 or to compensate consumer damage arising from law violation. In this case, the specific standards shall be determined by the Presidential Decree.

(3) The person in charge of paying the compensation for consumer damage based on the Consumer Damage Compensation Insurance Contract and etc. shall pay the amount in case of payment without any delay. In case of delay, the said person shall pay indemnities for delay.

(4) The Enterprise which wants to sign the Consumer Damage Compensation Insurance Contract and etc. shall not submit any false information such as earnings and revenues, in order to sign the Consumer Damage Compensation Insurance Contract and etc. (5) The Enterprise which signed the Consumer Damage Compensation Insurance

15 Contract and etc. shall use the cover which shows the fact.

(6) The Enterprise which did not sign the Consumer Damage Compensation Insurance Contract and etc. shall not make nor use the cover under the provisions of Paragraph 5 or similar cover.

Article 25 Support from E-Commerce Consumer Group

The FTC shall provide any necessary support within the budget to the institutions or bodies which undertake the business to protect consumer rights and promote fair trade in e-commerce and distant-selling.

Chapter 4 Investigation and Supervision

Article 26 Investigation of Violation

(1) When the FTC or the Mayor/Province Governor admits that there is any case violating this act, the body or he/she shall launch necessary investigation under the authority.

(2) If the Mayor/Province Governor is about to launch investigation under the provisions of Paragraph 1, he shall notify the FTC beforehand. If there is any possibility of overlapping the investigation, the FTC shall ask the said Mayor/Province Governor to suspend the investigation. The requested Mayor/Province Governor shall suspend the investigation as far as there is no persuasive reason.

(3) When the FTC or the Mayor/Province Governor launches an investigation under the provisions of Paragraph 1 or 2, the result (in case of taking any punishment, such as corrective order, the contents of punishment shall be included) shall be notified in written document to the concerned party of the case.

(4) Any person shall report the FTC or the Mayor/Province Governor, if there is any case, which violates the law. (5) If 5 years have passed since the ending date of violation, the FTC shall not issue any

16 corrective measure under the provisions of Article 32 about violation, nor impose any surcharge under the provisions of Article 34.

Article 27 Searching the Disclosed Information and etc.

(1) In order to promote fair trade rules and prevent any consumer damage in e- commerce and distant-selling, the FTC shall search the disclosed information posted on the information network by consumer protection related agencies regarding e-commerce and distant selling.

(2) Business or any related group shall not reject or hamper in the way for the FTC to search information under the provisions of Paragraph 1.

(3) In order to effectively collect and utilize the information on consumer damage, the FTC shall ask the institutions or body handling the consumer protection in e-commerce and distant selling to submit or share related information and data.

(4) The requested institution or body under the provision of Paragraph 3 shall not reject to submit or to share the information as far as there is no justifiable reason.

Article 28 Disclosing Information on Law Violation and etc.

In order to build the fair trade rules and prevent consumer damage in e-commerce and distant-selling, among the searched information under the provisions of Paragraph 1 Article 27, the FTC shall disclose all necessary information related to law violation as prescribed under the Presidential Decree.

Article 29 Promoting Fairness in Evaluation and Authentication Process

(1) In order to promote fairness and protect consumers in e-commerce and distant- selling, the person who undertakes evaluation and authentication of the concerned business(hereinafter “evaluation and authentication businessman”), shall disclose standards and methods on evaluation and authentication as determined by the Presidential Decree and fairly evaluate and authenticate.

(2) Standards and methods of evaluation and authentication under the provisions of

17 Paragraph 1 shall be appropriate to deliver the information on the performance and efforts taken to protect consumers and promote fair trade.

(3) The FTC shall submit documents related to activities and management done by evaluation and authentication businessmen.

Article 30 Report and Supervision

(1) When the Mayor/Province Governor shall issue corrective recommendation under the provisions of Article 31 or measures under the provisions of Article 32, he shall report the fact to the FTC as prescribed by the Presidential Decree.

(2) When it is deemed necessary for effective law enforcement, the FTC shall ask the Mayor/Province Governor to investigate, confirm or submit any document regarding the related case. In addition, the FTC shall request him to take necessary measure to correct the situation. In this case, as far as there is no special reason, the said Mayor/Province Governor shall comply with the measures.

Chapter 5 Corrective Measure & Surcharge

Article 31 Recommendation to Comply with a Corrective Measure

(1) When an Enterprise has committed acts in violation of the provisions of this Act, the FTC or the Mayor/Province Governor may decide on a corrective measure and recommend that the said Enterprise comply with the measure, before taking the corrective measure in accordance with Article 32. When the person accepts the recommendation concerned, he/she should notify that corrective measures are deemed to be made under the provisions of this Paragraph 3.

(2) The Enterprise subject to recommendation in accordance with the provisions of Paragraph 1 shall notify the FTC or the Mayor/Province Governor on whether he/she accepts the recommendation within ten days from the date of notification of the recommendation. (3) When the person subject to recommendation in accordance with the provisions of

18 Paragraph 1 accepts the recommendation, it shall be deemed that a corrective measure has been made under the provisions of the Article 32.

Article 32 Corrective Measures and etc.

(1) The FTC may order corrective measures to any person who falls under any of the following paragraphs or violates the provisions of the Act.

1. Violation of the provisions of Paragraph 2 and 3 of Article 5, Paragraph 1 of Article 6, Article 7, Paragraph1, 3 or 5 of Article 8, Article 9, 10, 11, Paragraph 1 or 3 of Article 12, Paragraph 1, 2 and 4 of Article 13, Article 14 and 15, Paragraph 1 and 3 of Article 16, Paragraph 1, 3 and 5 of Article 17, Article 18, Paragraph 1 of Article 19, Article 20, Paragraph 1 of Article 22, Paragraph 2 of Article 23, Article 24, Paragraph 2 and 4 of Article 27, Paragraph 1 and 2 of Article 29. 2. Any activity, which violates any of the subparagraphs of Paragraph 1 of Article 21.

(2) Followings are the corrective measures, which fall under the provisions of Paragraph 1. 1. Cease violation 2. Compliance with the provisions under this Act. 3. Public notification over the fact of receiving corrective measures. 4. Other measures necessary to correct the violations.

(3) Necessary elements regarding public notification on Subparagraph 3 of Paragraph 2 shall be determined by the Presidential Decree.

(4) If the concerned Enterprise or person repeats the violation or does not comply with corrective measures under the provisions of Paragraph 1, the FTC may order the said Enterprise or person to suspend the whole or part of his business, for a period not exceeding one year determined by the Presidential Decree.

Article 33 Request for the Dispute Settlement of Consumer Damages

(1) The FTC or the Mayor/Province Governor shall ask the institution which handles consumer protection or dispute settlement of consumer damages as prescribed under the Presidential Decree, to address the problem before taking any corrective measure under

19 the provisions of Article 31 or Article 32, when there is any request to settle consumer damage related to the violation of law in e-commerce or distant selling.

(2) The Fair Trade Commission or the Mayor/Province Governor shall notify the subjected person that no corrective measure prescribed on Article 32 will be taken, if the person accepted the recommendation or adjustment guidelines requested based on Paragraph 1.

(3) Even though the said person accepts and implements the recommendation or adjustment guidelines by the Consumer Dispute Settlement Body based on the provisions of Paragraph 1, there will be no corrective measure based on the provisions of Article 32. In this case, the provisions of Paragraph 5 Article 26 shall not be applied.

(4) When the FTC asks to settle dispute in accordance with Paragraph 1, it can support necessary budget for the said dispute settlement within the budget.

Article 34 Surcharge

(1) Despite corrective measures under the provision of Paragraph 2 Article 32, if the violation continues or consumer protection is deemed to be hard only with corrective measures, the FTC may order the said Enterprise or person to suspend the whole or part of his business, for a period not exceeding one year determined by the Presidential Decree. Substituting suspension, the FTC may impose a surcharge not exceeding the turnover related to the violation set forth in the Presidential Decree: provided, however, that where turnover does not exist or cannot be estimated, the FTC may impose a surcharge not exceeding fifty million won.

(2) In imposing surcharges pursuant to the provisions in Paragraph 1, the FTC shall take into account;

1. Extent of consumer damage arising from violation 2. Extent of the concerned Enterprise’s efforts to compensate consumer damage 3. Scale of benefits acquired from violation 4. Contents, duration and frequency of violation

(3) If the Enterprise violating the provisions of this Act is engaged in a merger, the FTC

20 may regard the violation as having been committed by the Enterprise that continues to exist after the merger or the Enterprise that is established as a result of the merger and impose and collect surcharges thereon.

(4) The Provisions of Article 55-4, and Article 55-5 on the Monopoly Regulation and Fair Trade Act shall apply mutatis-mutandis to the extension of surcharge payment period, payment by installment, imposition of surcharge and disposition of arrears under the provisions of Paragraph 1.

Chapter 6 Supplementary Provisions

Article 35 Prohibition of Contract unfavorable to Consumers, etc.

Any contract, which violates Article 17 or Article 19, and is unfavorable to consumers, shall be null and void.

Article 36 Exclusive Jurisdiction

Any lawsuit on the contract or transaction with distant seller shall come under the exclusive jurisdiction of the district court having the jurisdiction over the domicile of consumers at the time the lawsuit is filed, and if there is no domicile, over the residence thereof: Provided, however, that in the cases where the domicile of consumer is not obvious at the time the lawsuit is filed, this shall not apply.

Article 37 Registration of Business Association

(1) Business Association, which is established to promote public interests such as enhancing consumer confidence, and to flourish e-commerce and distant selling can register to the Fair Trade Commission as prescribed under the Presidential Decree.

(2) Necessary elements regarding the conditions, methods and procedures for registration under the provisions of Paragraph 1 shall be determined by the Presidential Decree.

21 Article 38 Delegation of Authority and Entrustment of Powers

(1) The FTC may delegate a part of authority vested in it under this Act to the head of any agency under its control, the Mayor/Province Governor, or the head of any other administrative agency pursuant to the Presidential Decree.

(2) The Mayor/Province Governor may delegate a part of authority as prescribed by this Act to the head of City, County, and Ku (referring to the head of autonomous Ku) pursuant to the Presidential Decree.

(3) The FTC may entrust a part of its tasks to business association registered in Paragraph 1 of Article 37, if necessary for effective law-enforcement.

(4) Executives and staff who are entrusted with the tasks under the provisions of Paragraph 3 shall be classified as public officials in case of applying punitive measures under the provision of Article 129 or 132 of Criminal Law.

Article 39 Application of Monopoly Regulation and Fair Trade Act

(1) The provisions of Article 42, 45 and 52 of the Monopoly Regulation and Fair Trade Act shall apply mutatis-mutandis to the deliberations and decisions of the FTC under this Act.

(2) The provisions of Paragraph 1 and 4 of Article 50 of the Monopoly Regulation and Fair Trade Act shall apply mutatis-mutandis to the investigation on violating the law launched by the FTC or the Mayor/Province Governor.

(3) The provisions of Article 53, Article 53-2, Article 54, Article 55 and Article 55-2 of the Monopoly Regulation and Fair Trade Act shall apply mutais-mutandis to granting exclusive jurisdiction and handling cases in association to filing of objection, stopping of the enforcement of corrective order, filing of a suit, and raising of dissatisfaction as to the remedies given by the FTC or the Mayor/Province Governor whom the FTC delegates a part of authority as prescribed under Article 38.

(4) The provisions of Article 62 of the Monopoly Regulation and Fair Trade Act shall apply mutatis-mutandis to commissioners or public officials in the FTC who work or

22 had worked regarding this law.

Chapter 7 Penalty Provisions

Article 40 Penalty Provision

Any person who violates any order issued under the provisions of Paragraph 1 of Article 32 shall be subject to imprisonment for not more than three years, or a fine not exceeding one hundred million won.

Any person who conducts business in violation of the business suspension order as prescribed under Paragraph 4 of Article 32 shall be subject to imprisonment for not more than two years or a fine not exceeding fifty million won.

Any person who falls under any of the following paragraphs shall be subject to a fine not exceeding thirty million won.

1. A person who fails to file a report or files a false report as prescribed under Paragraph 1 of Article 12. 2. A person who use signal of Paragraph 5 of Article 24 in violation of Paragraph 6 of Article 24, or use any similar signal.

Any person who falls under any of the following paragraphs shall be subject to a fine not exceeding ten million won.

1. A person who provides false information on trade name and etc. as prescribed under Paragraph 1 of Article 13. 2. A person who provides false information on terms and conditions of transaction as

23 prescribed under Paragraph 2 of Article 13.

Article 44 Concurrent Punishment

If representative of corporation or an agent, serviceman or other employee of corporation or individual commits violation as prescribed under Article 40 or Article 43, a fine as prescribed under the respective Article shall be imposed on such corporation or individual, in addition to the punishment of the perpetrator.

Article 45 Fine for Negligence

(1) Any person who falls under any of the following subparagraphs shall be subject to a fine for negligence not exceeding ten million won.

1. As an issuer of payment tools as prescribed under Paragraph 4 of Article 8, a person who fails to strike Consumer Damage Compensation Insurance contract in violation of Paragraph 1 of Article 24 2. As an issuer of payment tools as prescribed under Article 8-4, a person who strikes Consumer Damage Compensation Insurance contract by delivering false documents. 3. A person who falls under Subparagraph 1 of Paragraph 1 and Subparagraph 1 of Paragraph 5 of Article 21. 4. A person who fails to comply with a request to appear in court more than two times without just cause in violation of Subparagraph 1 of Paragraph 1 of Article 50 of the Monopoly Regulation and Fair Trade Act, which applies in accordance with Paragraph 2 of Article 39. 5. A person who fails to report or present the necessary material or object, or who makes false reports or presents false materials in violation of Subparagraph 3 of Paragraph 1 or Paragraph 3 of Article 50 of the Monopoly Regulation and Fair Trade Act, which applies in accordance with Paragraph 2 of Article 39. 6. A person who refuses, interrupts or evades an investigation under Paragraph 2 of Article 50 of the Monopoly Regulation and Fair Trade Act, which applies in accordance with Paragraph 2 of Article 39.

(2) Any person who falls under any of the following subparagraphs shall be subject to a fine for negligence not exceeding five million won.

24 1. A person who fails to keep transaction records, nor to inform the way to access the record to consumers, in violation of Article 6. 2. A person who fails to mark the identification information of businessman in accordance with Paragraph 1 of Article 10, or Paragraph 1 of Article 13. 3. A person who fails to file a report in accordance with Paragraph 2 or 3 of Article 12. 4. A person who fails to deliver any document on the contents of contract in violation of Paragraph 2 of Article 13. 5. A person who fails to send out document, in violation of Article 16.

(3) A fine for negligence as referred to under paragraph 1 and 2 shall be imposed and collected by the Fair Trade Commission, or Mayor/Province Governor pursuant to the Presidential Decree.

(4) The criteria for assessment of fine for negligence as referred to under Paragraph 1 and 2 shall be determined by the Presidential Decree.

(5) Any person who is dissatisfied with the disposition of fine for negligence as referred to under paragraph 1 and 2 may raise an objection against the Fair Trade Commission or the Mayor/Province Governor within thirty days after he is informed of the disposition.

(6) If the person who is subject to the decision of the assessment of fine for negligence as referred to under paragraph 1 and 2 raises objection under paragraph 5, the Fair Trade Commission or the Mayor/Province Governor shall notify it without delay to the competent court, which shall, upon receiving the notification, bring the case of the fine for negligence to a trial under the Non-Contentious Case Litigation Procedure Act.

(7) If no objection is raised and no fine for negligence is paid within the period set under paragraph 5, the fines shall be collected according to the examples of the disposition of local tax in arrears.

Addendum Article 1 Effective Date This Act shall take effect on July 1, 2002.

Article 2 Interim Measures concerning the registration of distant selling

25 business

(1) The person who registers the distant-selling business under the provisions of Article 17 of the Door-to-Door etc. Act with the law enactment, is deemed to report to the Mayor/Province Governor under the provisions of Article 12. However, the report issues based on the provisions of Article 12 shall be compensated within 2 months of law- enactment.

(2) Any distant seller who, under the provisions of Article 24 of the Door-to-Door etc. Act with the law enactment, reports suspension and shutdown of business or resumption of business after suspension, is deemed to report based on this law. If a distant seller is resume business after suspension, he/she shall report the fact under the provisions of this law.

Article 3 Interim measures concerning withdrawal of the offer

Withdrawal of the offer and its effects done by the provisions of the Door-to-Door etc. Act with this law enactment shall be carried out under the existing provisions

Article 4 Interim measures concerning suspension of business

The order of suspension of business over the activities before this law-enforcement is based on the provisions of the Door-to-Door etc. Act.

Article 5 Interim measures concerning penal provisions and surcharges

Imposing penal provisions and surcharges in response to the activities done before this law-enforcement is based on the provisions of the Door-to-Door etc. Act.

Article 6 Relations with other statues

If this statue has any provision falling under the provisions of the Door-to-Door etc. Act referred to or enforced by other existing statues, it is deemed to refer to the said statue or the said provisions of this act.