Fair Trade Commission Chairman Han Ki-jeong speaks during a press conference at the Government Complex Sejong, Thursday. Yonhap
The nation's antitrust watchdog initiated an emergency on-site inspection into the headquarters of TMON and WeMakePrice, Thursday, as the two online shopping platforms face potential insolvency, with reported delays in payments to sellers and refunds to customers.
The sudden financial troubles of the struggling shopping platforms were precipitated by poor financial management by Qoo10, a Singapore-based e-commerce giant that operates the two Korean subsidiaries.
During a press conference, Fair Trade Commission (FTC) Chairman Han Ki-jeong said the authority will investigate whether the companies are processing refunds to customers promptly. Additionally, the FTC established a special response team at the Korea Consumer Agency to facilitate collective dispute mediation.
“We will do our best to minimize damage to customers, and inspect whether the troubled firms are offering refunds to clients who canceled their orders from the platforms,” Han said.
“We will also team up with financial authorities and relevant organizations to prevent the damage from spreading further to more customers and sellers.”
Since earlier this month, TMON and WeMakePrice have failed to disburse earnings to sellers on their platforms. Beginning on Tuesday, sellers began to leave the platforms in droves due to mounting fears that they will not be paid. Customers who purchased online tickets for flights and hotel reservations using these platforms are also encountering difficulties in obtaining refunds, amid rising concerns about possible financial defaults.
According to data from the consumer protection agency, the number of consumer grievances about the platforms has surged this week, with more than 2,300 telephone complaints being made since Tuesday. Most of the complaints were about refunds for online travel package purchases, according to the FTC.
WeMakePrice co-CEO Ryu Hwa-hyun, right, answers questions from reporters regarding payment delays at the firm's headquarters in Seoul, Thursday. Yonhap
The head of WeMakePrice issued a public apology on Thursday for the inconvenience caused to customers. He also committed to ensuring refunds for affected customers.
“We are capable of covering refunds to customers,” WeMakePrice co-CEO Ryu Hwa-hyun said.
“We will compensate them and do all we can so that small business owners and the self-employed can recover from damages.”
Financial authorities have not yet determined the exact extent of the damage, but estimates suggest it could exceed 170 billion won ($122.8 million).
Both shopping platforms are in the process of offering refunds to customers, though the timeline for completing these refunds remains uncertain.
Financial Supervisory Service Governor Lee Bok-hyun speaks during a meeting at the National Assembly in Seoul, Thursday. Yonhap
The Financial Supervisory Service (FSS) also dispatched a group of inspectors to the headquarters of the two companies. According to the financial watchdog, six prosecutors are inspecting the case and checking the scale of damage.
“Starting from June 2022, the authority has monitored their deteriorating financial circumstances, and the supervision of payment delays commenced in July of this year,” FSS Governor Lee Bok-hyun said. “We will report further details involving the case to the public as quickly as possible.”
Finance Minister Choi Sang-mok also ordered relevant government authorities to strengthen monitoring of the latest incident.
“We will make efforts to prevent the spread of damage by thoroughly monitoring any updates on the incident under close collaboration with the FTC, the FSS and the Financial Services Commission,” Choi said.