Memorandum of Understanding between the Korea Consumer Agency and the National Consumer Affairs Center of Japan on Resolving Consumer Damages related to Cross-border Transactions

-Compensation process for the consumer damage to become simpler; domestic companies’ competiveness to enhance on increase in foreign consumers using domestic online shopping malls-

  On July 30, 2015, the Korea Consumer Agency (www.kca.go.kr) and the National Consumer Affairs Center of Japan (www.kokusen.go.jp)* signed a memorandum of understanding (MOU) on resolving consumer damages related to cross-border transactions. The signing took place at the headquarters of Japan’s National Consumer Affairs Center. The MOU has paved the way for Korean consumers to be properly compensated in cases of problems while traveling in Japan or using Japanese online shopping malls.

   * National Consumer Affairs Center (NCAC): An independent administrative agency under the Consumer Affairs Agency of Japan and works as a core consumer advocate organization

  According to the MOU, Korean consumers can file complaints (e.g., not receiving items purchased via Japanese online shopping sites) to the KCA and redress is provided through the NCAC, and the KCA handles complaints from Japanese consumers involving Korean business operators.

  The number of consumer complaints related to cross-border transactions is growing, but consumers are not properly compensated due to communication difficulties (language barrier) and different laws of the countries involved.

  The 1372 Consumer Counseling Center* is seeing the sharp rise in the number of complaints (812 cases in 2010 → 6,111 cases in 2014).

   * 1372 Consumer Counseling Center (www.ccn.go.kr): An integrated nationwide hotline that receives consumer counseling requests, participated by 10 consumer organizations, 16 municipal/local autonomous bodies, and the KCA

  The rise in consumer complaints involving cross-border transactions is a global phenomenon. Accordingly, the OECD’s Committee on Consumer Policy (CCP) has recommended member countries to take action to better resolve complaints and problems arising from cross-border transactions, and the UN Commission on International Trade Law (UNCITRAL) is discussing ways to resolve consumer complaints related to cross-border transactions.

  On the domestic front, the government’s three-year economic reform plan includes measures to facilitate the use of domestic online shopping malls by foreign consumers and attract tourists (including medical tourists) from abroad. However, many have pointed out the lack of redress measures for foreign consumers. The MOU is anticipated to provide such redress, thus strengthening credibility among foreign consumers toward products/services available in Korea as well as enhance the relevant industry’s competitiveness.

  This is the second MOU on handling consumer damages related to cross-border transactions in which the KCA concluded. The first took place on June 17 with the Vietnam Competition Authority. Based on close cooperation with NCAC, KCA seeks to protect consumer rights related to overseas travel and overseas online shopping sites, and take pre-emptive measures against complaints related to cross-border transactions.

  Going forward, KCA plans to establish cooperative channels with counterparts in vibrant consumer markets (e.g., China, ASEAN, US, and EU) in order to resolve consumer complaints stemming from cross-border transactions. Such efforts are likely to benefit both consumers and business operators in Korea (i.e., protecting the rights of consumers who engage in cross-border transactions and enabling domestic companies to enhance competitiveness).