Consumer protection entails establishment of fair competition/trade practices, protection of consumer rights, and resolution of e-commerce related disputes. In the area of fair competition and trading practices, major issues include dissemination of false and/or exaggerated advertisements and information via the Internet, disputes related to domain name usage, network fraud, and unfair competition arising from other unfair collective actions. In consumer rights protection, major concerns are protecting consumer rights in online purchasing, eradication of unfair trade practices, preventing harm to consumers, and protection of privacy. Lastly, in the area of dispute resolution, major concerns include conflicts between jurisdictions and overlapping applicable Acts and identifying alternatives to legal action for effective dispute resolution.

The Basic Act on Electronic Commerce and the Electronic Signature Act are the two Acts related to security and certification in Korea. The Basic Act on Electronic Commerce gives e-documents the same legal force as written documents. The Act was formulated to improve the viability of e-commerce, protect consumers, and to help implement government policies for promoting electronic commerce. The Electronic Signature Act was passed in February 1999 as a means to ensure the identity of the other party in remote communications in non face-to-face situations and to guarantee the integrity and authenticity of electronically signed documents. Both the Basic Act on Electronic Commerce and the Electronic Signature Act came into effect on July 1, 1999.

According to the Ministry of Information and Communication, as of May 14, 2002, there were 3,031,001 users of e-signature certificates in Korea. This was a 26% increase over 2,409,065 users identified in the first quarter. With the increase in the users of certificates, the role of certification authorities is becoming increasingly important.

Also, the Korea Certification Authority Central (http://www.rootca.or.kr) has established evaluation guidelines for e-signature certificate management to be used to review CA operations.

As shown in the table below, the certification market is expected to record rapid growth in Korea.

The Ministry of Information and Communication plans to ensure the interoperability of e-signatures so that people can use single certificates for e-signature for different e-commerce trades. The Ministry plans to take the necessary measures required at government level such as developing technical standards for e-signature interoperability and push certification authorities and financial institutions to reach agreement on ensuring interoperability at the earliest possible date. However, CAs and financial institutions are still at loggerheads about details on installing leased lines, identifying parties responsible for lease payments, and distribution of service fees.

On the other hand, six Asian countries including Korea and Japan have begun to recognize each other’s certificates in April 2002 to open new venues for e-trade. The Pan-Asian E-Commerce Alliance (PAA) recently linked the Korean system via its member KTNET to other PAA member countries to establish a pan-Asia e-trade system covering Korea, Japan, China, Taiwan, Hong Kong, Singapore, and Malaysia. Pilot e-document services based on interoperability of certificates have been underway since April 2, 2002.

Banks such as Shinhan, Choheung, Hana, Korea Exchange, and the Industrial Bank of Korea—all major players in corporate finance—have developed and are currently offering products that allow corporate customers to settle payments online through B2B transactions. Furthermore, a system that can handle business-to-business bill payments online among banks has been developed with the participation of eight banks including Korea Exchange, Choheung, and Woori under the initiative of the Korea Financial Telecommunications and Clearings Institute. The system has been in operation since March 2002. More banks are expected to join the system in the latter half of 2002.

Bolero.net was established in 1994 with 50% equity ownership each by SWIFT, the operator of a global financial network for the banking industry, and TT Club, a mutual insurance association of the global shipping industry. Its commercial B2B service, which started in September 1999, aims to become the electronic alternative for all paper-based transactions arising in trading including L/Cs of banks and B/Ls of shipping companies. Most banks in Korea including Korea Exchange, Choheung, and Woori have expressed keen interest in using bolero.net to offer their own foreign exchange services. Among them, Woori Bank is already a member of the bolero.net service. Mid- to large-size trading companies like Samsung Electronics, POSCO (Pohang Iron and Steel), and Hanjin Shipping have also joined bolero.net to build their own global supply chain management system. KTNET has signed a strategic partnership agreement with bolero.net to link bolero’s service to KTNET’s trade automation service for the Korean trade community.
TradeCard supports country-to-country trade. The countries that transact via the TradeCard system include Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, the Netherlands, Norway, Portugal, Singapore, Korea, Spain, Sweden, Switzerland, Taiwan, the U.K., and the U.S. Korea Exchange Bank and Choheung Bank are offering financial services for pre- and post- export operations to TradeCard member companies in Korea.

The growth of e-commerce is also giving rise to related problems. Korea possesses the basic requisite conditions to foster a thriving e-commerce such as an advanced IT infrastructure, rising investments in e-commerce led by large companies, and robust growth of the e-commerce market. However, despite the fact that external indices are showing rapid growth, e-business implementation by the business sector as the new engine for growth in the digital age is still lagging behind advanced countries. The reasons the government cites for the delay in the proliferation of e-commerce include lack of collaboration among businesses; uncertainties about the outcome; insufficient investment resources among small- and medium-sized companies; lack of corporate innovation and sincere pursuit of nontransparent business practices; lack of standardization; shortage of trained manpower; and the absence of a standardized payment system
Problems inherent in Korea’s B2C and B2B e-commerce are described in below

As shown in the diagram below, the primary reason for the relatively slow growth of e-commerce as identified by Korean companies engaged in e-business is a lack of standardization. Non-participants in e-business found that system implementation cost and lack of expert manpower are the major problems.