Obligations regarding withdrawal or cancellation of a contract
Period for withdrawal or cancellation of a contract
- A consumer who has concluded a contract with an online shopping mall operator on the purchase of products may cancel the contract within the period provided for in the following items (referring to the period agreed upon by the parties to a transaction if it exceeds the period prescribed in any of the following subparagraphs) (Article 17(1) of the Act on the Consumer Protection in Electronic Commerce, etc.).
· Within 7 days from the date of receiving a document (including electronic documents; the same shall apply hereinafter) on the contents of the contract
· Within 7 days from the date he/she found out or could have found out the address, where a document on the contents of a contract has not arrived, a document without the address, etc. of the online shopping mall operator has arrived, or the cancellation, etc., of an order cannot be made within 7 days due to the change in the address of the online shopping mall operator, etc.
·In the case where there is an act of interference with cancellation of contract, etc., 7 days from the date the interference has ended
- In the event where the cancellation is made within the period as stated above, the cost of product return shall be borne by the consumer (Article 18(9) of the Act on the Consumer Protection in Electronic Commerce, etc.).
Reasons for restricting the withdrawal or cancellation of a contract
- In any of the following cases, consumers shall not cancel an order or a contract against the will of the online shopping mall operator (Main body of Article 17(2) of the Act on the Consumer Protection in Electronic Commerce, etc. and Article 21 of the Enforcement Decree of the Act on the Consumer Protection in Electronic Commerce, etc.).
1. Where the product, etc., has been destroyed or damaged due to a cause attributable to the consumer; however, this shall not apply where the package has been damaged to check the contents of the products;
2. Where the value of the product has substantially decreased due to the consumer’s use or partial consumption;
3. Where the value of the product has substantially decreased due to the lapse of time, making resale difficult or impossible;
4. Where the package of replicable product has been destroyed;
5. Where the provision of any services or digital content has commenced. However, this shall not apply to the portion for which the provision of such services or digital content has not commenced in cases of a contract comprising divisible services or divisible digital content; and/or
6. Where it is expected that allowing the cancellation of orders and contracts for goods which are separately produced upon the consumer’s order or other products similar thereto would cause a serious and unrecoverable loss to the online shopping mall operator, and where such fact has been separately notified in advance with respect to the relevant transaction and the consumer's written consent has been obtained (including electronic documents).
Exception to the restriction of withdrawal or cancellation of a contract
- In cases of products for which an order cannot be canceled under cases 2 through 5, an online shopping mall operator shall take necessary measures not to encumber the exercise of rights to cancel the order, such as clearly indicating the fact on the package of products or in a place where the consumer can easily recognize, or providing free samples. In the event where the operator fails to enforce such measures, the consumer may cancel his/her order or contract notwithstanding the restrictions provided above (Provision of Article 17(2) and main provision of Article 17(6) of the Act on the Consumer Protection in Electronic Commerce, etc.).
· Where an order, etc. for digital contents among services or digital content referred to in case 5 cannot be canceled by a consumer, the online shopping mall operator shall, in addition to indicating the fact that it is impossible to cancel an order, etc., take one of the following measures not to encumber the exercise of rights to cancel, etc., the order (Provision of Article 17(6) of the Act on the Consumer Protection in Electronic Commerce, etc. and Article 21-2 of the Enforcement Decree of the Act on the Consumer Protection in Electronic Commerce, etc.).
√ Permission for partial use: Provision of part of digital content by such means as preview or pre-listening, etc.
√ Permission for use for a limited period of time: Provision of digital content by setting a specific time period of use
√ Provision of digital contents for experiential purposes: Provision of digital content for which only limited functions can be used
√ Where it is impractical to provide test products, etc., by methods specified above: Provision of information on digital content
- Even if the consumer falls within one of the above reasons for the restriction, where the contents of the products are different from what was indicated or advertised, or have been performed differently from the terms of the contract, the consumer may cancel the order or contract within 3 months from the date of receiving the products or within 30 days from the date he/she found out or could have found out such a fact (Article 17(3) of the Act on the Consumer Protection in Electronic Commerce, etc.).
- In the event where any order or contract is canceled due to the reasons specified above, the cost of product return shall be borne by the online shopping mall operator (Article 18(10) of the Act on the Consumer Protection in Electronic Commerce, etc.).
Effective dates for withdrawal or cancellation of a contract
- Where the consumer cancels an order or a contract in writing, it shall enter into force on the date of sending the document to that effect (Article 17(4) of the Act on the Consumer Protection in Electronic Commerce, etc.).
Burden of proof
- If a dispute arises as to whether the consumer is responsible for damage to the products, whether and when the contract on the purchase of the products was signed, and whether and when the products were supplied, the burden of proof shall lie upon the online shopping mall operator (Article 17(5) of the Act on the Consumer Protection in Electronic Commerce, etc.).
Effect of withdrawal or cancellation of a contract
- Where a consumer has canceled an order or a contract, he/she shall return the products that have already been supplied (this shall not apply where products that have already been supplied are services or digital content) (Article 18(1) of the Act on the Consumer Protection in Electronic Commerce, etc.).
- An online shopping mall operator shall give a refund of the price of products received, within three business days from any of the following dates. In such cases, if the online shopping mall operator delays the refund to the consumer, he/she shall be required to pay an interest for a delay that amounts to an annual rate of 15% (Article 18(2) of the Act on the Consumer Protection in Electronic Commerce, etc. and Article 21-3 of the Enforcement Decree of the Act on the Consumer Protection in Electronic Commerce, etc.).
· The date the goods are returned in the case where a mail order distributor has supplied the goods
· The date the order is cancelled, etc. in the case where a mail order distributor has supplied services or digital content
· The date the order is canceled, etc. in the case where a mail order distributor has not supplied the goods, etc.
- In making a refund where a consumer has paid the price of the products by credit card or other means of settlement, an online shopping mall operator shall promptly request a business operator who has supplied the relevant means of settlement to stop or cancel the request for payment. However, if the online shopping mall operator has already received payment from the settlement business operator, he/she shall promptly give refund to such settlement business operator, and notify the consumer of this fact (Article 18(3) of the Act on the Consumer Protection in Electronic Commerce, etc.).
- In case of cancellation of orders or contracts after the online shopping mall operator has already received payment for products from the settlement business operator such as a credit card company, if the relevant operator fails to give refund to a settlement business operator without any justifiable grounds, a consumer may request the settlement business operator to offset the amount to be refunded against other debt he/she owes to the relevant online shopping mall operator (Article 18(6) of the Act on the Consumer Protection in Electronic Commerce, etc.).
- Where a settlement business operator delays offset prescribed above without any justifiable grounds, the consumer may refuse to settle the payment to the settlement business operator. In such cases, neither the online shopping mall operator nor the settlement business operator shall give any disadvantages to the consumer, such as treating the consumer as a person who has defaulted on making payment within the prescribed period, on the grounds of such refusal (Article 18(7) of the Act on the Consumer Protection in Electronic Commerce, etc.).
Cancellation of orders during temporary closure or suspension of business
- An online shopping mall operator shall continue to handle cancellation, etc. of orders and refund following such cancellation under even during temporary closure or suspension of business (Article 22(1) of the Act on the Consumer Protection in Electronic Commerce, etc.).
Compensation for damages for withdrawal or cancellation of a contract
- In the event of cancellation of an order or a contract conducted during the statutory period for the cancellation of an order or a contract, an online shopping mall operator shall not request the consumer to pay either the penalty for the breach of contract, or compensation for damages (Article 18(9) of the Act on the Consumer Protection in Electronic Commerce, etc.).
- Where products have already been partially used or consumed, an online shopping mall operator may request a consumer to pay the amount equivalent to the profit the consumer gained from such partial use or consumption or equivalent to the expenses incurred in the supply of products within the following amount (Article 18(8) of the Act on the Consumer Protection in Electronic Commerce, etc. and Article 24 of the Enforcement Decree of the Act on the Consumer Protection in Electronic Commerce, etc.).
· Expenses incurred in supplying the consumable parts concerned in the case where the resale of consumable parts is made difficult or the resale price drops substantially due to the use
· Expenses incurred in supplying the portion partially consumed by the consumer in the case where the products are composed of a number of identical divisible objects
- Where a contract on the sale of goods is terminated due to a cause attributable to the consumer, an online shopping mall operator may claim damages for compensation, and the amount of compensation shall not exceed the amount computed by adding the delay compensation for nonpayment to the amount specified in the following (Article 19(1) of the Act on the Consumer Protection in Electronic Commerce, etc.).
· Where the supplied goods are returned, the amount whichever is larger between the following items:
√ The usual rental fee for the returned products, etc. or the amount equivalent to usual benefits from the use thereof
√ The amount computed by subtracting the price of the returned products, etc. at the time of such return from the selling price of the products
· Where the supplied products are not returned, the amount equivalent to the selling price of the products
Sanctions for violations
- Any person who fails to observe his/her duty in connection with the cancellation of orders and contracts shall be ordered to enforce corrective measures by the Fair Trade Commission. If such non-observance is repeated beyond the standard set forth under the Enforcement Decree of the Act on the Consumer Protection in Electronic Commerce, etc. despite receiving corrective action order, the Commission may order to fully or partially suspend the business or impose upon the relevant business operator penalty surcharges (Subparagraph 1 of Article 32(1), Article 32(4), and Article 34(1) of the Act on the Consumer Protection in Electronic Commerce, etc.).
Q. When a consumer wishes to cancel his/her order 2 weeks after receiving the products, do I have to allow cancellation in such a case?
A. A consumer who engages in a transaction on an online shopping mall is allowed to cancel his/her order within a given period of time. However, if 7 days have elapsed since a document that contains the contract details was sent at the time of product delivery, such cancellation request may be refused.
A consumer who enters into a contract to purchase products on an online shopping mall may cancel his/her order or contract within one of the following periods (in the event where the parties to the transaction has agreed for a longer period than any of the following periods, the agreed period shall apply) and the cost of returning the products shall be payable by the consumer.
1. Within 7 days from the date of receiving a document (including electronic documents; the same shall apply hereinafter) regarding the contents of the contract
2. Within 7 days from the date he/she found out or could have found out the address, where a document on the contents of a contract has not arrived, or a document without the address, etc., of the online shopping mall operator has arrived, or the cancellation, etc. of an order cannot be made within the 7 days due to the change in the address of the online shopping mall operator, etc.
3. Within 7 days from the date the interference has ended, in the case where there existed any interference, etc. regarding withdrawal or cancellation of contract