The South Korean government has recently taken significant steps to regulate deceptive online practices, commonly referred to as ‘dark patterns.’ With the amended Electronic Commerce Act set to take effect on February 14, 2025, businesses operating in Korea must prepare for stricter compliance requirements. One of the key areas of regulation involves the use of free trials that automatically convert into paid subscriptions—a practice that has often led to consumer complaints and high drop-off rates.
Contents
Background: Addressing Online Dark Patterns
Dark patterns refer to deceptive UI/UX designs that manipulate users into making unintended choices. These designs can include hidden fees, misleading auto-renewal policies, and excessive pop-ups urging customers to upgrade. Recognizing the impact of such practices, South Korea’s Fair Trade Commission (FTC) has been working on a legal framework to increase transparency and protect consumers since 2023. The revised Electronic Commerce Act, approved in February 2024, provides a clear legal foundation for regulating dark patterns and enforcing consumer rights.
Key Provisions of the Revised Law
1. Mandatory Pre-Approval for Subscription Charges
One of the most impactful changes is the requirement that e-commerce services must obtain user consent at least 30 days before a free trial converts into a paid plan. This provision aims to ensure that users are aware of upcoming charges and can make informed decisions about continuing or canceling their subscriptions. Businesses that fail to comply with this regulation risk financial penalties and service suspensions.
2. Restrictions on Repetitive Subscription Pop-Ups
To prevent businesses from aggressively pressuring users into paid subscriptions, the law restricts repetitive pop-ups encouraging users to upgrade. However, businesses can continue displaying pop-ups if they include an option that allows users to disable them for at least seven days.
3. Transparency in Pricing and Auto-Renewal Charges
Companies must also ensure that the total price of a subscription, including all additional fees, is clearly displayed before users proceed with a purchase. This change is designed to prevent misleading pricing strategies where hidden charges only become visible after a user has committed to a purchase.
Penalties for Non-Compliance
To enforce these regulations, the revised law introduces strict penalties for violations:
- First offense: Fine of 1 million KRW (~$1,000) and a three-month service suspension.
- Second offense: Fine of 2 million KRW (~$2,000) and a six-month service suspension.
- Third offense: Fine of 5 million KRW (~$5,000) and a 12-month service suspension.
With these measures, the government aims to hold businesses accountable for their practices while providing consumers with a more transparent and fair online shopping experience.
Implications for Businesses
The enforcement of this new law means significant adjustments for e-commerce businesses operating in Korea. Companies that rely on auto-renewal subscription models must ensure they implement the necessary pre-approval notifications and transparent pricing displays. Businesses using aggressive marketing tactics, such as frequent pop-ups, will need to revise their UX strategies to comply with the new restrictions.
To assist businesses in adapting to these regulations, the FTC has released official guidelines and will be hosting informational sessions ahead of the implementation date. It is crucial for e-commerce companies to familiarize themselves with the new requirements and make necessary adjustments to avoid penalties and reputational risks.
Conclusion: A Step Towards Consumer-Centric E-Commerce
South Korea’s revised Electronic Commerce Act represents a major step toward protecting consumer rights in the digital space. By eliminating deceptive subscription practices and enforcing greater transparency in pricing, the government aims to create a more trustworthy e-commerce environment. For businesses, this means an opportunity to build stronger customer relationships through ethical marketing. Moving forward, companies that prioritize user trust and compliance will be better positioned for long-term success in the Korean market.
