November 24, 2024

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Finance Minister and Deputy Prime Minister Choi Sang-mok, right, whispers to People Power Party Cahir Han Dong-hoon, a policy coordination meeting between the government and the ruling party held at the National Assembly in western Seoul on Tuesday. (Yonhap)

Customers who have yet to receive refunds after purchasing general products from e-commerce platforms Tmon and WeMakePrice due to a liquidity crisis surrounding the companies will get their money back by the end of this week, officials said Tuesday.

Finance Minister and Deputy Prime Minister Choi Sang-mok announced that the refund process for the customers who purchased products other than travel services or gift cards on the two imperiled e-commerce platforms would be completed by “the end of this week,” in a briefing held after a policy coordination meeting between the government and the ruling party.

“The government has decided to help the refund process for customers of general products through credit card issuers and electronic payment gateways to be completed by the end of this week,” Choi said.

The deadline policy does not extend to refunds for consumers who purchased vacation packages, such as airline tickets and accommodation bookings, and gift cards through the two online marketplaces owned by the Singapore-based Qoo10. The Credit Finance Association of Korea, a non-profit organization that represents the credit financing industry, is currently reviewing whether it is the suppliers or the payment gateways that are responsible for paying the refunds for travel bookings and gift cards, as the legal guidelines remain unclear on the matter compared with the corresponding rules for general products. Observers say that the refund process for such consumers is projected to be delayed due to the issue.

“We plan to swiftly deal with the refund process for general products and actively cooperate (on finding a solution) for vacation packages and gift cards,” Choi explained.

As of Tuesday morning, over 5,000 cases have been filed with the Korea Consumer Agency from consumers requesting a collective dispute settlement over their purchase of travel packages, accommodation reservations and plane tickets through the platforms. The KCA started receiving requests for dispute settlement since Aug. 1 and will wrap up the process on Friday.

Financial authorities estimated the total overdue payments to amount to 278.3 billion won ($202.7 million), as of Aug.1, but officials said that the figure could grow.

On top of its newly announced measures for consumer refunds, the government plans to cut back the amount of time allowed for e-commerce platforms to delay their payments to vendors from the current maximum of 60 days, according to Choi.

Gift card issuers will be required to be prepared to refund 100 percent of the issued amount, to be able to reimburse customers fully whenever necessary.

Liquidity worth 500 billion won will be provided to the vendors on the two troubled e-commerce platforms, Choi added. The vendors will be eligible to apply for a 300 billion won credit guarantee program via the state-run Industrial Bank of Korea and the Korea Credit Guarantee Fund starting Friday, financial authorities said.

The remaining 200 billion won will be provided to the vendors, mostly small businesses, in low-interest loans.

Tuesday’s meeting marks the first meeting between government officials and the ruling party after former People Power Party interim leader Han Dong-hoon was elected as the new party chair last month.

The crisis surrounding the e-commerce platforms operated by Qoo10 comes as the two companies failed to disburse payments and earnings owed to sellers as early as May. As unpaid sellers started to leave the platforms, many customers who purchased products and services began to experience trouble obtaining refunds.

Observers suspect the company suffered a cash crunch after using funds from Tmon and WeMakePrice to acquire US online shopping platform Wish for $173 million in February.

By Jung Min-kyung (mkjung@heraldcorp.com)