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Photo courtesy of Yonhap News |
[Alpha Biz= Kim Jisun] SEOUL, Dec. 9 — As controversy intensifies over allegations that Coupang added a “full exemption” provision to its terms of service last year—amid the ongoing investigation into the massive leak of 33.7 million customer accounts—the Korea Fair Trade Commission (KFTC) has determined that Coupang is unlikely to avoid liability for damages.
Some observers had speculated that Coupang might invoke the disputed clause to avoid compensating users and instead respond to legal challenges through litigation. However, the KFTC has concluded that the customer data breach falls under exceptions that would prevent such an exemption from taking effect, meaning that sanctions and damage compensation could still be imposed.
A KFTC official stated on Dec. 9, “After reviewing Coupang’s full terms of service, we determined that the clause in question cannot be interpreted as a provision that completely exempts the company from all liability related to this data breach.”
The controversy centers on Article 38, Paragraph 7 of Coupang’s terms of service, which states that the company is not liable for damages arising from:
unlawful access to servers by third parties,
damages incurred while preventing or blocking such unlawful acts, and
viruses, spyware, or other malicious programs transmitted or distributed illegally by third parties using the company’s services.
Industry sources have raised suspicions that this clause was revised in November of last year without proper notice to consumers. The issue gained traction after Kang Hoon-sik, Senior Secretary to the President, referenced Coupang’s terms during a recent senior aides’ meeting, ordering a thorough review of any clauses deemed unfair to consumers.
While Paragraph 7 appears to disclaim liability for damages caused by illegal third-party activity, Paragraph 8 immediately following it states that the company remains responsible for damages arising from its own intent or negligence. Regulators interpret this to mean that the current data breach—stemming from alleged deficiencies in Coupang’s data management practices—would fall under the company’s negligent conduct and therefore cannot be exempted.
In other words, even if Paragraph 7 were applicable, Paragraph 8 overrides it where the company’s own fault is involved, preventing Coupang from avoiding responsibility for damage compensation.
Meanwhile, the KFTC is conducting a broader review into potential violations of the Terms and Conditions Act, examining not only the disputed exemption clause but Coupang’s entire set of terms of service.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
