South Korea’s Fair Trade Commission (FTC) has issued a warning to Costco Korea for violating e-commerce laws. (Image courtesy of Yonhap)
SEOUL, March 25 (Korea Bizwire) — South Korea’s Fair Trade Commission (FTC) has issued a warning to Costco Korea for violating e-commerce laws by requiring customers to visit physical stores to cancel certain membership types while allowing online sign-ups.
The regulatory action, announced on March 24, specifically targeted Costco’s policy regarding its Executive memberships, which are premium-tier offerings that provide 2% cash back on purchases (excluding VAT and coupon discounts) up to 1 million won annually.
Costco Korea operates four types of memberships: Gold Star and Executive Gold Star for individuals, and Business and Executive Business for commercial customers. While standard Gold Star and Business memberships could be both initiated and terminated online, Executive memberships – despite allowing online enrollment – required members to visit a physical warehouse to cancel.
The FTC determined this practice violated regulations mandating that services initiated through electronic documents must also allow termination through the same digital means, known as the “online completion service provision obligation.”
In response to the FTC’s intervention, Costco implemented system changes on January 27 to enable online cancellation for all membership types, including Executive memberships.
“This enforcement action is expected to not only resolve consumer inconvenience but also raise awareness about consumers’ rights to complete service cancellations online,” the FTC stated.
Ashley Song (ashley@koreabizwire.com)
