South Korea’s Fair Trade Commission (FTC) has recently identified and addressed terms of service clauses from prominent brands—Nike, Chanel, and Hermes—that impede individuals from reselling purchased products, deeming these clauses as violations of consumer rights. This determination, announced on 29th November, targeted ten unfair clauses within their terms of service, primarily focusing on resale restrictions, copyright infringement, and business disclaimer provisions.
Nike and Chanel’s terms included clauses allowing contract cancellation and membership revocation if customers were discovered purchasing products for resale purposes. Nike explicitly reserves rights to limit, refuse, or cancel sales, or revoke membership upon finding buyers engaged in resale activities. Chanel inferred membership revocation in cases where resale intent was “reasonably presumed.”
The FTC rebuked these clauses, emphasising consumers’ right to choose to possess or sell purchased items through secondary transactions. Critically, the FTC denounced unconditional restrictions imposed by businesses after purchases, citing subjective application of “resale purposes” as unfair under contract law.
Concerns were also raised over clauses granting Nike and Chanel, wide usage rights to consumer-generated content, like product reviews, without prior consent. These provisions allowed editing or modification without members’ approval, granting businesses broad content licenses.
Additionally, clauses absolving businesses of responsibility, regardless of fault, for customer harm were addressed. Hermes’ clause regarding third-party receipt of ordered products absolved the company from liability. The FTC asserted that businesses should bear responsibility for harm resulting from intentional or negligent actions, even when involving third parties.
Rectifications were made to clauses related to order cancellations, limiting compensation for damages to specific losses, ensuring a fairer landscape for consumers in South Korea.
