[Gi Ha-yeong's Life Card] Can't Use Merge Point... How to Exercise the 'Installment Defense Right'

Right of Installment Objection, the Right to Refuse Remaining Installment Payments
Conditions Must Be Met Such as Over 200,000 Won and Installments of 3 Months or More

Is there anyone these days without at least one credit card? In modern society, anyone can have a card if they want. Credit cards have brought unparalleled convenience to daily life. Now, wherever you go, you can easily see people paying with credit cards or smartphones. As demand has increased, cards with various benefits are being released almost daily. In response, Asia Economy delivers various stories related to cards, which are inseparable from our consumer life, through the weekly 'Cards in Daily Life' corner, including introductions to new cards, behind-the-scenes industry stories, and guides for card beginners.

[Image source=Yonhap News]

Last August, Merge Point, which attracted one million subscribers by promoting 'unlimited 20% discount' and other offers, suddenly suspended its service. This was because Merge Plus, the operator of Merge Point, was found to have operated without registering as an electronic financial business operator.

After a refund chaos occurred, consumers who did not receive refunds applied for 'installment objection rights' (Halbu Hangbyeon-gwon) with card companies as a last resort, but it was found that 8 out of 10 applicants did not meet the requirements and their requests were rejected. Some of you may have heard of installment objection rights for the first time due to the Merge Point incident. We have summarized the useful right of installment objection rights in credit card installment transactions in connection with the Merge Point case.

Installment Objection Rights: The Right to Refuse Payment of Remaining Installments

According to data submitted by the Financial Supervisory Service to Song Jae-ho, a member of the Democratic Party of Korea, as of last September, the number of customers who applied for installment objection rights related to Merge Point at seven domestic card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Hana, BC) was 2,604, with a total amount of 499.2 million KRW.

Installment objection rights allow consumers to request card companies to refuse payment of remaining installments when they do not receive the purchased goods or services as promised. According to the Installment Transactions Act, this applies when the installment contract is invalid, canceled, or terminated; when all or part of the goods are not delivered; or when the purpose of the installment contract cannot be achieved due to the merchant's non-performance.

For example, if a consumer pays 900,000 KRW for a gym personal training (PT) package in three installments and has paid the first installment of 300,000 KRW but can no longer receive PT due to the gym's closure, they have the right to refuse payment of the remaining 600,000 KRW. Although the amount already paid cannot be refunded, the remaining installments do not have to be paid.

To exercise the objection right, a certified letter must be sent to the card company. The certified letter should be written according to the five Ws and one H (who, what, when, where, why, how), including the purchase date, merchant name, card number, phone number, and the reason for requesting the objection right.

Only Available for Purchases Over 200,000 KRW and Installments of 3 Months or More

However, there are conditions for exercising installment objection rights. The purchase amount must be at least 200,000 KRW, and the installment period must be three months or longer. For example, if the purchase amount is less than 200,000 KRW or if payment was made in a lump sum or by check card, the objection right cannot be exercised. Additionally, products such as agricultural, fishery, and livestock products, which are excluded from the Installment Transactions Act, are also excluded.

In the case of Merge Point, 2,202 applicants, accounting for 84.6% of the total, were rejected due to not meeting these requirements. The amount involved was approximately 331.5 million KRW.

Even if the requirements for applying for installment objection rights are met, it is expected to take time before the rights are actually applied. The Financial Supervisory Service has requested an authoritative interpretation from the Fair Trade Commission on whether installment objection rights can be applied to cases where Merge Point was paid for via credit card installments in e-commerce. The application of the objection right will be determined based on the result of this interpretation. Currently, card companies are suspending installment payment claims for members who have applied to exercise installment objection rights.

Some criticize that applying the objection right is complicated. Representative Song Jae-ho said, "Although Merge Point sales have stopped, many customers feel it is very unfair to continue paying card installments by a few tens of thousands of won or a few months difference," and emphasized, "Related institutions including financial authorities and the Fair Trade Commission should actively work to protect the rights of payment victims."