The luxury direct purchase platform 'Balaan' has entered corporate rehabilitation proceedings after being unable to pay seller fees for several months, raising concerns about the institutional gaps in online platform transactions. Following last year's TMON and WEMAKEPRICE (TIMF) incident, the Fair Trade Commission submitted a related bill to the National Assembly, but discussions have shown no progress for over half a year. Despite warnings that neglecting the settlement risks could lead to a second or third 'Balaan incident,' the National Assembly is effectively doing nothing.
According to the government on the 11th, the Fair Trade Commission is monitoring the situation related to settlements and consumer damages while contacting Balaan. However, there are currently no direct measures that the Fair Trade Commission can take under the law. Balaan operates as a platform that mediates between sellers and consumers, rather than purchasing and selling directly like a large supermarket, meaning it is not subject to the existing large-scale distribution business law.
Balaan filed for corporate rehabilitation proceedings at the Seoul Rehabilitation Court on the 31st of last month. It has not been able to pay settlement funds to over 1,300 registered sellers, and industry estimates indicate that the unpaid amount could reach hundreds of billions of won. Some sellers pointed out that 'even confirming the settlement details was difficult,' stating that 'the settlement criteria changed frequently, and notifications were not adhered to.'
Balaan stated in the past that it implemented a settlement system through a payment gateway service, but it ultimately failed to secure seller trust during actual operations. Despite the existence of contracts and settlement cycles (choosing from 7, 15, or 30 days), payments were delayed and the standards were unclear, according to the common responses from the registered companies.
The bigger problem is that this kind of structure has spread throughout the platform industry. Even though payments are made in real time, actual settlements can vary depending on the platform's operating conditions, forcing sellers to endure 'uncertainty' in revenue. Recently, platforms like Must It and Trenbe have shortened settlement cycles in an effort to regain trust, but the structural issues remain unresolved, according to industry perspectives.
The Fair Trade Commission submitted the 'Large-scale Distribution Business Bill Amendment' to the National Assembly last October. The core of the amendment mandates that platforms with annual brokerage revenues of more than 10 billion won or transaction amounts exceeding 100 billion won must settle within 20 days after purchase confirmation, and that more than half of the settlement funds must be separately deposited in financial institutions or covered by payment guarantee insurance.
However, this amendment has been pending in the National Assembly's Political Affairs Committee for six months. The Fair Trade Commission intends to only partially regulate online platform settlement practices under the existing large-scale distribution business law, while the Democratic Party maintains that a separate 'Online Platform Law' covering all transactions is necessary. The Democratic Party is considering a method of pre-designating major operators for regulation to prevent abuse of platform dominance.
Concerns about 'dual legislation' conflicts have been raised as two bills with different regulatory scopes and approaches are discussed concurrently, and the original goal of protecting registered sellers has been pushed to the backburner.
Additionally, uncertainty has increased regarding the overall legislative schedule of the National Assembly following the impeachment of former President Yoon Suk-yeol. Even if the April extraordinary National Assembly is held, the amendment, which has not passed the Political Affairs Committee, is unlikely to be referred to the plenary session, raising skepticism about any substantial progress in discussions for the time being.
Seo Yong-goo, a professor in the Business Administration department at Sookmyung Women's University, said, 'In a situation where the vulnerability of online distribution networks is revealed, more precise and flexible policy responses should be implemented quickly.'