주 메뉴 바로가기 본문으로 바로가기

PUBLICATIONS image
PUBLICATIONS

KICJ Research Reports

Analysis of Illegal Activities on Resale Platforms (Open Markets) and Response Strategies 사진
Analysis of Illegal Activities on Resale Platforms (Open Markets) and Response Strategies
  • LanguageKorean
  • Authors Jeon Dongjin, Sunghyun Cho, Suh, Joon Bae
  • Date December 31, 2023
  • Hit71

Abstract

1. Executive Summary


  This study systematically investigates specific disputes and damages arising from resale platforms. A thorough and systematic survey among users was conducted to empirically explore and comprehensively understand the diverse range of damages they have experienced. Drawing from these empirical findings, the study derives policy implications to enhance dispute resolution procedures and damage recovery methods. The ultimate goal is to contribute to the development of user protection and support policies on resale platforms.


  To analyze the primary inconveniences individuals encounter in in secondhand trading, the study leveraged two years’ worth of civil complaint big data provided by the Anti-corruption & Civil Rights Commission. The major types of illegal activities were derived based on this data, and a comprehensive review was conducted to assess how users and major platform operators responded to these activities. The illegal activities identified in this study can be broadly categorized into 1) fraud, 2) distribution of prohibited items, and 3) unreported sales activities by professional sellers.


  The research employs a variety of methodologies, involving analysis of official data related to user disputes and damages reported to entities like the Consumer Complaint Big Data, National Police Agency, Korea Internet & Security Agency, and E-Commerce Mediation Committee. It also incorporates user surveys and focus group interviews, as well as in-depth discussions with platform operators and law enforcement officers. Furthermore, monitoring and enforcement outcomes from agencies such as the Ministry of Food and Drug Safety and the Korea Customs Service were integrated to assess the status of the distribution of prohibited items on resale platforms.


2. Disputes from consumer-to-consumer transactions


  Based on recent 5-year data on e-commerce dispute resolution provided by the E-Commerce Mediation Committee, the number of B2C (business-to-consumer) dispute resolution cases has remained relatively steady each year. However, there has been a continuous rise in the number of dispute resolution cases for C2C transactions (consumer-to-consumer transactions). Notably, the number of dispute resolution cases for personal transactions surged from 649 cases in 2018 to 4,200 in 2022, constituting approximately 77% of the total cases.


  In 2022, the primary dispute types arising from personal transactions were contract non-performance (39.5%), followed by defective goods (34.6%), misinformation about products (7.8%), delivery-related issues (5.9%), and contract cancellation, exchange and return (4.8%)


  C2C transactions primarily involve secondhand goods used in daily life, and the transaction amounts for items involved in disputes were distributed as follows: 100,000 to 500,000 won (46.2%) > 50,000 to 100,000 won (16.8%) > 10,000 to 50,000 won (15.4%) > 500,000 to 1,000,000 won (6.2%), with small-amount transactions under 500,000 won accounting for over 80%.


3. Police statistics


  According to the analysis of police statistics, the number of internet fraud cases has exhibited a consistent upward trend, with 92,636 cases in 2017, 112,000 cases in 2018, and 136,074 cases in 2019. The peak occurred in 2020 during the COVID-19 pandemic, reaching 174,328 cases. Subsequently, the numbers were 141,154 cases in 2021 and 155,715 cases in 2022, consistently maintaining a level around 150,000. Approximately 70% of the overall cybercrime cases are identified as internet fraud, and this trend continues to increase steadily. Notably, direct transaction fraud constitutes the highest proportion of internet fraud, with 123,168 cases in 2020, 84,107 cases in 2021, and 79,052 cases in 2022.

  

  Regarding the scale of damages, financial losses from secondhand trading fraud have experienced a significant increase, amounting to 20.2 billion won in 2014, 270.9 billion won in 2020, and 360.6 billion won in 2021. Considering that phishing fraud losses decreased from 774.4 billion won in 2021 to 500 billion won in 2022, it is evident that the scale of damages from secondhand trading fraud remains at a notably serious level.


4. Findings of user surveys and in-depth interviews


  1) Dispute experience and vulnerability factors


  The study found that over the last two years, 10.3% of resale platform users experienced disputes. These disputes were predominantly associated with users acting as buyers (67.0%), followed by cases where users were sellers (36.2%), and instances where users were both buyers and sellers (6.4%). Moreover, users engaged in more transactions and larger amounts tended to encounter disputes more frequently.


  An analysis of whether different user patterns led to distinct dispute rates revealed that among the group experiencing disputes, there was a relatively higher preference for non-face-to-face transactions, while the preference for face-to-face transactions was relatively low. Additionally, the survey on the preference for the safe payment system, considered a robust user protection measure, indicated a significant percentage of participants from the group with dispute experiences expressing a preference against this system. In summary, it can be inferred that buyers are more prone to disputes than sellers, and the likelihood of disputes increases with higher transaction frequency and amounts. Moreover, the group favoring non-face-to-face transactions and expressing a dislike for the safe payment system appears to be more susceptible to disputes.


  2) Experience of losses from criminal activities and vulnerability factors


  The study found that over the last two years, 7.1% of resale platform users have encountered losses from criminal activities at least one. The majority of incidents, accounting for 70.8%, occurred when the user was a buyer, followed by cases where the user was a seller (26.2%), and instances where the user was both a buyer and a seller (7.7%). The group that experienced losses tended to engage in higher purchase frequency, larger purchase amounts, and larger sales amounts compared to the group without such experiences. However, there was not a significant difference in the number of sales made by sellers who experienced losses and those who didn’t.


  An examination of whether different user patterns lead to distinct dispute rates revealed a significantly lower preference for face-to-face transactions in the group that experienced disputes. Incidents of unpleasant occurrences during face-to-face transactions were minimal. Given that the majority of losses experienced by crime victims who participated in this survey occurred in non-face-to-face transactions, it is difficult to interpret their preference for non-face-to-face transactions as a response or reaction that occurred after the losses had taken place.


  Responses indicating a preference or aversion to the safe payment system were relatively higher in the group with criminal loss experiences. Although this group difference was not statistically significant, there is potential for interpreting stronger preferences or aversions to the safe payment system in the group with loss experiences. In summary, it is inferred that the likelihood of becoming involved in criminal damage increases with higher purchase amounts, sales amounts, and purchase frequency. However, it is concluded that the frequency of sales does not have a significant impact on the occurrence of criminal damage. Therefore, additional research seems necessary to understand this phenomenon. The group with experiences of criminal damages tends to prefer non-face-to-face transactions and exhibits a strong preference or aversion to the safe payment system, highlighting their vulnerability.

  

  3) User awareness and experience regarding prohibited items


  Regarding banned items, users generally lacked awareness that certain products closely associated with their daily lives were classified as prohibited items. Conversely, items such as pharmaceuticals, alcohol, and tobacco, which are heavily regulated offline, were relatively well-recognized as prohibited in secondhand transactions. However, in the case of highly regulated items, there were instances where users were aware of their prohibited status but still engaged in numerous transactions, often using tactics such as decoy methods to evade detection by authorities. These cases underscore the need for platform operators and relevant authorities to develop more sophisticated crackdown methods. Moreover, the experience of trading prohibited items was significantly higher in groups that had encountered disputes or criminal damages. Due to the limitations of this study, it was challenging to determine whether these differences stemmed from the intrinsic characteristics of individuals experiencing disputes or criminal damages, or if they were influenced by environmental factors conducive to disputes or criminal damages. Further research on the factors that determine these differences is deemed necessary.


  4) Perception of professional sellers regarding use of resale platforms


  In the group interviews conducted for this study, most professional sellers expressed a general lack of awareness that the items they procured for professional selling needed to be reported.


   They indicated a disregard for considering voluntary tax payments in the future, asserting that the share of their overall sales was not significant. Even those who operated their own business establishment emphasized that the revenue generated from resale platforms was at the level of pocket money. Many believed they were engaging in transactions at a moderate level, having no detrimental impact on the healthy culture of secondhand trading.


  There were significant variations in the perceived amount threshold for tax collection among sellers, and they emphasized the need to carefully consider the characteristics of the products they sell. This resistance from professional sellers appears to be relatively strong, likely due to the specific nature of resale platforms.


5. Policy recommendations for the protection of resale platform users


  This study comprehensively examines illicit activities on resale platforms and, based on the findings, puts forward several policy recommendations for safeguarding platform users.


  Firstly, greater accountability and obligations should be required of intermediary platforms businesses. Platform operators should be mandated to: 1) accurately disclose the absence of guaranteed rights in personal transactions and improve the management of the user rating system. Additionally, platforms should provide detailed information on prohibited items to enhance user awareness. Clear dispute resolution criteria should be established as guidelines for user responses to damages. To maintain order, platform operators should verify business operators and ensure accurate disclosure for professional sellers. Platform operators should also clearly communicate the payment deposit system to users and enhance convenience for both buyers and sellers.


  The establishment of a regulatory framework is imperative for ensuring user protection. First, prevention of fraud and other user losses requires mandating the payment deposit system for high-risk transactions. The government should also incentivize self-regulation among private businesses. In dealing with fraud on resale platforms, unified criteria should be established to suspend payment to fraudulent accounts. Simultaneously, measures should be implemented to protect victims whose account payments were suspended due to involvement in third-party fraud. There is a call for streamlining the response system to secondhand trading fraud to minimize unnecessary administrative burden and efficiently address damages in person-to-person transactions.


  Additionally, there is a need to establish clear criteria on professional sellers contributing to market confusion and transactions involving secondhand overseas direct purchase. This information should be publicly disclosed to the private sector to ensure tax transparency. Measures should also be implemented to build credible data on users' reports of cyber fraud damages and integrate it with the private sector, facilitating easy access to this information by users.


  Ultimately, ensuring the safety of resale transactions requires a collaborate effort between the public and private sectors through nationwide promotion. This initiative must consistently educate the public about potential illicit activities in used transactions and offer precise guidance on responding to disputes or losses. Additionally, it is imperative to address negative perceptions surrounding the challenges in used transactions to encourage victims to respond proactively.

File
  • pdf 첨부파일 23-B-12 중고거래 플랫폼(오픈마켓)을 이용한 불법행위 실태분석과 대응방안.pdf (6.54MB / Download:22) Download
TOP
TOPTOP