40 Trillion Subscription Economy Market... Dark Nudge Damage
Representative Proposal for Partial Amendment of the Information and Communications Network Act
[Asia Economy Reporter Minyoung Cha] As consumer damages caused by automatic payments for subscription services in information and communication services increase recently, a law is being promoted to obligate service providers to notify consumers at least 7 days in advance of the scheduled payment.
On the 23rd, Rep. Jeongsook Yang of the National Assembly's Science, Technology, Information and Broadcasting and Communications Committee announced that she has introduced the "Partial Amendment to the Act on Promotion of Information and Communications Network Utilization and Information Protection" to obligate service providers to notify consumers in advance at least 7 days before the payment date.
As subscription services become active in various fields, damages caused by a kind of sales tactic called "dark nudge" are also increasing. Dark nudge is a newly coined term referring to a sales tactic that exploits consumers' tendency to avoid reversing their choices, inducing irrational purchases.
According to a survey by KT Economic Management Research Institute, the subscription economy market size rapidly grew from 26 trillion won in 2016 to over 40 trillion won in 2020. According to the Korea International Trade Association's International Trade and Commerce Research Institute, over 70% of consumers in Korea used subscription businesses in 2020.
According to data submitted to Rep. Yang Jeongsook by the Korea Consumer Agency, dark nudge can be largely divided into ▲automatic payment, ▲insufficient total amount display, ▲pressure sales, and ▲hindrance to cancellation. Over the past five years, 1,372 consumer consultation cases related to dark nudge were received, of which 149 cases were related to automatic payments, with 61 consultations specifically about automatic payment issues.
Although there is a "Content User Protection Guideline" including prior notification by service providers to prevent consumer damages caused by automatic payments, it is only a recommendation and has limitations. It is also impossible to sanction service providers.
Rep. Yang Jeongsook stated, "The consumer damages caused by unfairly restricting consumer choice rights are directly becoming the profits of service providers," and added, "I expect this amendment to contribute to the sound growth of the subscription economy and the protection of consumer rights."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
