Reseller Reporting? 3 Legal Responses to Black Resellers for E-commerce Companies

Law firm Veat received a request from e-commerce company A (hereinafter referred to as “the client”) to review measures to address multiple black resellers illegally registering and selling products produced and distributed in-house on unauthorized distribution channels.

With the recent rapid growth of the e-commerce market, where anyone can easily sell and purchase products through online platforms, the issue of ‘Black Resellers’ who damage brand trust and disrupt revenue structures has become a major concern for companies. In particular, resellers who illegally resell self-produced or exclusively distributed products are operating through various online spaces, including open markets, used product platforms, and even overseas reverse direct purchase channels, threatening the company's legitimate distribution structure.

Unlike simple parallel imports or used transactions, these reseller actions lead to consumer confusion, price distortion, and A/S confusion, directly infringing on the company's brand value and market order. Accordingly, e-commerce companies are increasingly needing legal measures against ‘black resellers disrupting legitimate distribution order’, and at the center of this is the “Act on Prevention of Unfair Competition and Protection of Business Secrets” (hereinafter referred to as ‘the Unfair Competition Prevention Act’).

Black Resellers: How much is ‘illegal’?

Simple ‘reselling’ itself is not inherently illegal, and general resale activities are not likely to be legally restricted if the genuineness of the product and the legality of the distribution route are recognized. However, the following cases may be deemed ‘black reselling’ and have a higher likelihood of illegality.

- Unauthorized use of another’s achievements

When a reseller copies and posts the client’s product photos, descriptions, and detail pages as they are, this can be assessed as the unlawful use of the client’s investment and efforts. The Unfair Competition Prevention Act explicitly prohibits such actions, and the illegality is even clearer if the reseller's actions are repetitive and organized.

- Actions that cause confusion regarding the product’s origin

When a black reseller uses names, logos, and descriptions similar to those of the official sales channels, consumers are likely to mistake it for an official product. This can be considered an unlawful act causing confusion regarding the product’s origin, and there are precedents where courts have recognized violations of the Unfair Competition Prevention Act in similar cases.

- Actions that damage credit or divert demand

When reselling at significantly lower prices than the official selling price or attaching excessive premiums, the company's normal distribution policies may be distorted, and brand trust may be damaged. In particular, when quality problems occur, consumers are likely to mistake this for the company’s fault, which can severely damage the brand image.

3 Measures for Black Reseller Response from Law firm Veat

Law firm Veat has advised the client on feasible legal measures, along with an assessment of illegality, to respond to black resellers illegally reselling the client’s products.

1. Requesting a ban from online platforms

This involves reporting and requesting deletion from open markets or e-commerce platforms where the black reseller is operating. Many platforms prohibit ‘infringement of trademarks or copyrights’ and ‘consumer deception’ in their own terms and conditions, and attaching relevant supporting data (product comparison images, consumer damage cases, etc.) can result in the deletion of posts or account suspension.

2. Sending warning letters and notices of rights infringement

The second step is to send an official warning letter. If the reseller continues similar sales activities repeatedly or there is obvious illegality, a certified letter can be sent warning them of the responsibility for stopping sales and compensating for damages based on violations of the Unfair Competition Prevention Act and copyright infringement. This warning letter can be used as a preliminary step in subsequent civil or criminal lawsuits, and is also effective in making the black reseller aware of the legal risks.

3. Concurrent civil and criminal legal measures

If sales continue even after the warning, more proactive legal measures are possible, such as ‘claims for injunction against unfair competition,’ ‘claims for damages,’ and ‘criminal charges for violation of the Copyright Act.’ In particular, actions that repeatedly infringe brand images and mislead consumers are increasingly being recognized by courts as acts of unfair competition, and the possibility of establishing a business obstruction charge against the reseller has also been considered.

As e-commerce companies continue to grow rapidly, establishing a legitimate distribution order and preparing a brand protection system are essential. Uncontrolled proliferation of black resellers acts as a risk of undermining long-term trust, not just short-term profits.

Law firm Veat provides practical and feasible customized legal advice to client companies facing black reseller issues, based on a high understanding and practical experience in e-commerce, intellectual property (IP), and platform technology. By comprehensively analyzing various laws such as the Unfair Competition Prevention Act, Copyright Act, and Trademark Act, we systematically support strategic measures such as online platform response, notices of rights infringement, and civil and criminal lawsuits, to protect products and brands from illegal distribution, and will continue to provide proactive and professional legal response to adapt to the changing market environment.

If you need legal advice regarding black resellers and the Unfair Competition Prevention Act, please feel free to contact Law firm Veat.

This case study can also be viewed on the Law firm Veat blog.

- Legal Measures for E-commerce Companies Against Black Resellers 3 Ways

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Law firm Veat