• South Korea's FTC has issued corrective orders on 47 unfair terms and conditions in the operations of Chinese e-commerce platforms, AliExpress and Temu.
• The FTC identified clauses that unfairly limit consumer rights and excessively exclude the platforms from liability, in violation of local e-commerce laws.
• The platforms' terms permit extensive collection of users' personal data without specifying usage duration and allow data sharing without user consent, violating South Korea's Personal Information Protection Act.
• The FTC anticipates that standardizing AliExpress and Temu's terms will help protect the rights of South Korea's estimated 13 million overseas shoppers.

South Korea's antitrust regulator, the Fair Trade Commission (FTC), has recently issued corrective orders on 47 unfair terms and conditions found in the operations of two major Chinese e-commerce platforms, AliExpress and Temu. Despite their rapid growth, estimated at around 10 million users in South Korea, these Chinese online retailers have come under scrutiny for their business practices, advertising, and handling of customer complaints and requests.

The FTC identified 47 clauses in the platforms' terms and conditions that were deemed to unfairly limit consumer rights and excessively exclude the platforms from liability, in violation of local e-commerce laws and other relevant regulations. The FTC ordered adjustments to several existing clauses that limit the platforms' liability to consumers rights and broadly restrict compensation for damages.

With the corrections, the two platforms would bear responsibility within the limits of their negligence and be required to comply with the South Korean civil law for consumer compensation.

Data Protection and Consumer Rights

Furthermore, some of AliExpress and Temu's existing terms permit extensive collection of users' personal data without specifying usage duration and even allow the sharing of data with third parties without user consent. South Korea's Personal Information Protection Act mandates that e-commerce platforms obtain users' consent before transferring their personal information, and to include consumer complaint procedures in their terms and conditions.

The FTC ordered AliExpress and Temu to specify which data could be collected and to delete any clauses that unfairly limit consumers' data protection rights. The companies' existing terms require consumer disputes to be resolved exclusively in overseas courts, with AliExpress specifying Hong Kong and Temu specifying Singapore as their choice of destination. The FTC ordered such terms to be revised to state that South Korean laws apply to disputes with South Korean consumers.

The Impact of Chinese E-commerce Platforms

The FTC anticipates that standardizing AliExpress and Temu's terms before Black Friday, slated for next week, will help effectively protect the rights of South Korea's estimated 13 million overseas shoppers. Direct overseas purchases by South Korean consumers reached 6.8 trillion won (US$4.9 billion) in 2023, up from 5.3 trillion won in 2022, largely driven by increased online purchases from China through platforms like AliExpress and Temu.

While the United States had historically held the largest share of South Korean overseas purchases, goods from China accounted for 48.7 percent of the total in 2023. This shift in consumer behavior is indicative of the growing influence of Chinese e-commerce platforms in the global market.