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How the Modern Generation Spends Money: Second-hand Markets

Recently on the streets, some Kingos may have heard someone ask, “Are you Daangn?” This phrase is used to ask if a person has made an appointment through Daangn Market, which is a famous second-hand marketplace application. The second-hand market that was once considered eccentric has become a smart trend now. In June, Shinsegae Group’s Vice Chairman Chung Yong-jin gained great empathy from people when he posted his purchase of a pair of second-hand Nike sneakers on his Instagram account. About 7.74 million transactions were made in the first half of 2021 alone on Bunjang, Korea’s leading second-hand market platform. However, as the size of the second-hand market grows, many problems are rising to the surface. Therefore, the Sungkyun Times (SKT) will now investigate the second-hand market, the problems surrounding them, and efforts to develop second-hand markets in a better way.

What Is a Second-hand Market?

Usually, a second-hand market means a marketplace where used goods are traded between individuals. In Korea, an online cafe from Naver named Joonggonara was the first platform for buying and selling second-hand goods in Korea. Then from the 2010s, the second-hand market expanded with the development of smartphone applications such as Bunjang and Daangn Market. With the rapid rise of the second-hand market, the change in consumer sentiment due to the coronavirus disease 2019 (COVID-19) has played a major role. Last year, consumption tended to shrink because of the unprecedented infectiousness of COVID-19, as well as the uncertainty of the situation. As a result, using secondhand markets became a big trend as people could buy things at a lower price and earn some money by selling things they don’t need anymore. Korea Development Institute (KDI) statistics show that the number of second-hand market application users in March this year increased 2.1 times compared to last year. With the prevalence of the secondhand market, the negative recognition of it in the past has gradually disappeared. Buying products through the secondhand market, which was previously considered frugal, is now considered as reasonable consumption. According to the market research company Embrain Trend Monitor’s 2020 survey on second-hand transactions and associated platforms, about 67 percent of the respondents said, “There is less resistance to used goods than before.” In addition, the effect of environmental protection through the second-hand market has begun to be noticed. From a survey conducted in June 2021 by a second-hand market application, Hello Market, about 66 percent of application users said “Environmental protection and resource recycling are important reasons for second-hand transactions,” indicating that the environmental protection effect of second-hand transactions played a significant role for its prevalence.

Increasing Number of Second-hand Market Application Users (covid19board.kr)

Problems with Second-hand Markets

Second-hand World? Swindle World!

Despite the growth of the second-hand market and its platforms, the fear about the crimes that may occur during transactions can make some market users uneasy. In particular, fraud is a chronic problem of the second-hand market, greatly contributing to the development of negative perceptions of second-hand transactions. According to the aforementioned Embrain Trend Monitor survey, about 57 percent of respondents said, “Second-hand transactions pose a high risk of fraud during transactions.” This indicates that the risk of fraudulent transactions is still a big problem for second-hand market users. The types of fraud that occur during transactions are becoming more diverse and sophisticated: a seller can disappear after receiving money, sell fake products, or use a fake payment system that mimics the online safe payment system. The fundamental problem with fraud is that there is no way to actively rescue victims when they are swindled during a second-hand transaction. In the case of small fraud, victims often do not report the incident. Even if they report it, it can take several months to investigate, and victims often do not receive any compensation. Furthermore, the second-hand market platform that mediated the trade only says “Ask the police for help” to the victim and holds zero responsibility for fraud. As the platform does not hand over any information about the assailant to prevent privacy violations, victims have to collect all information for reporting alone. Such responses from the platforms and avoidance of responsibility are problematic because it has a significant impact on victims’ reluctance of fraud reporting.

Trade of Fraudulent Used Goods (news.sbs.co.kr)

A New, But Cheatable Investment

As second-hand markets have developed, controversy over Millennials and Generation Z’s new “resell” culture has also become heated. Reselling is the act of individuals buying expensive luxury goods, especially rare products, and reselling them at a higher price than the regular price. Many Millennials and those of Generation Z think of reselling as a new investment technique, creating new buzzwords such as “sneaker-tech (sneakers+tech)” and “Cha-tech (Chanel+tech)”. For example, the price of a pair of Nike sneakers rose from the cover price of 219,000 won to almost 10 million won range when it collaborated with famous singer G-Dragon, indicating the high profitability of reselling. However, many people raise questions about reselling. Resellers cause market confusion by making it impossible for people who really need a product to buy it at regular prices. There are also many negative reactions to tax evasion. According to the tax industry, sales of temporary and non-repeatable second-hand products are tax-free, but those with profitable purposes and repeatedly implemented are taxable. Therefore, if resellers do not report their business registration while continuing to resell, they may be charged with tax evasion. However, the number of expedients is increasing day by day because the country cannot check whether all resellers are reporting their registration or not. Unfair and limited regulation of reselling is also a problem. Unlike the case of illegal tickets, where selling performance tickets at higher prices after buying at regular prices is strictly regulated by the Public Performance Act, there is no such system to prevent resellers who trade second-hand products. Like this, a lack of measures to prevent the surge of resellers could cause further problems.

Nike and G-Dragon’s Collaboration Sneakers (PEACEMINUSONE Official Instagram)

Efforts to Develop Secondhand Markets

Strengthen the Safety of Second-hand Market Platforms

For the safe development of secondhand markets, continuous update of second-hand market platforms is essential. Currently, various secondhand market platforms strive to eradicate crime in various ways, such as opening telephone services, strengthening monitoring, and identifying transactions based on artificial intelligence. However, most importantly, the data of users with criminal histories must be secured to create a safer environment. Therefore, a direct link between second-hand market platforms and fraud-related information institutions is needed. Recently, the website of the National Police Agency’s Cyber Investigation Service and the financial fraud prevention service called The Cheat provide a service to check the validity of the bank account number and mobile phone number of the transaction target. In particular, in the case of The Cheat, the cumulative number of fraud prevention cases has reached 20 million alone. If the second-hand market platforms direct users to check each other’s bank account numbers or mobile phone numbers through the above site during the transaction process, it can be expected to reduce fraud issues in second-hand markets with the help of reliable intelligence agencies. Further damage could also be prevented by guiding the sites to register swindlers’ phone numbers or bank account numbers so that a more systematic database can be established when investigative agencies get reports from fraudulent users. Furthermore, The Cheat also provides a service that allows victims of fraud to gather together to catch fraudsters and overcome fraud damage. If these services become more public, more victims can be prevented.

Financial Fraud Prevention Service “The Cheat” (thecheat.co.kr)

Establish an Institutional System

A legal framework must be constructed to more clearly respond to the various problems and risks that could be encountered in second-hand markets. To prevent small fraud cases, measures of withdrawal delay are urgently needed. Currently, in the case of a voice phishing crime, victims can request an account payment suspension so that money cannot be transferred or withdrawn from the criminals’ account, but this service is not applicable to second-hand markets. However, given the fact that the number of frauds caused by second-hand transactions is not small, account payments suspension should be applied as well. According to the Financial Supervisory Service’s investigation in 2015, 76 percent of the damage was returned if reported within 10 minutes through the account payment suspension system. This indicates that the system is expected to have a significant effect on second-hand transactions. In addition, brands should provide aggressive regulations towards resellers who make wrong use of their products. Since July 2021, some luxury brands like Chanel have announced that they will partially revise the sales regulations to prevent resell. They need to regulate “hoarding”, which means buying the same products in large quantities, and investigate consumers who have shown abnormal consumption patterns based on the purchase history for possible reselling and tax evasion.

As much as the growing influence of second-hand markets, the crimes and controversies that arise together often confuse people. Nevertheless, the second-hand transaction is already deeply embedded in our lives, becoming a “change” that will make our lives beneficial, not just a passing fashion. For some, it is a small pleasure in their leisurely daily lives, and for others, it is a good means to protect mother nature. Looking forward to the future that second-hand market platforms, trading parties, and society as a whole develop together, the SKT hopes Kingos to use second-hand markets more wisely.

김다빈  bin8348@g.skku.edu

<저작권자 © THE SUNGKYUN TIMES, 무단 전재 및 재배포 금지>

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