Gift Card Regulation Blind Spots... Increasing Cases of Damage, Urgent Need for System Improvement

Consumer Agency Handles 2,457 Consultations from January to May This Year
191 Requests for Damage Relief
60.6% Refusal of Use Due to Expired Validity
Litigation Support System Available for Small Claims and Others

[Asia Economy Reporters Lim Chun-han and Jeon Jin-young] Office worker Park purchased a dining gift certificate but ended up disappointed. He requested a 90% refund after the expiration date, but was refused on the grounds that the gift certificate had been sold at a discount. Mr. Kim said, "I thought refunds were possible within five years, so this was very frustrating," adding, "I never want to buy gift certificates again." Housewife Lee received a chicken gifticon as a birthday present from an acquaintance. Similarly, she was unable to use the gifticon within the validity period and requested a 90% refund. However, the company refused the refund, citing that the product was sold during a discount event.

Recently, the types of gift certificates have diversified beyond paper vouchers to include mobile product and cash vouchers, and distribution channels have expanded, leading to a sharp increase in consumer damages.

According to data obtained by Asia Economy from the Korea Consumer Agency on the 29th, the number of consultations related to gift certificates from January to May this year was 2,457, and it is estimated to exceed 4,000 by the end of the year. By year, the numbers were 2,968 in 2017, 3,413 in 2018, 3,600 in 2019, 3,905 in 2020, and 26,812 in 2021. These figures combine consultations for both traditional and new types of gift certificates. Last year, consumer consultations surged significantly due to the Merge Point incident.

The number of damage relief applications related to gift certificates from January to May this year totaled 191. By year, the figures were 160 in 2017, 168 in 2018, 228 in 2019, 298 in 2020, and 495 in 2021. As the issuance scale of gift certificates increases annually, related damage relief applications are also on the rise. By type of damage relief application, "use refusal due to expiration" accounted for 818 cases (60.6%), making up the majority. This was followed by "refund refusal" with 181 cases, "use refusal within validity period" with 143 cases, "non-delivery of gift certificates" with 16 cases, and "others" with 191 cases.

In the case of gift certificates, sales practices that induce bulk purchases or cash payments by offering high discounts are likely fraudulent, so consumers should refrain from such purchases. Mobile gift certificates often have shorter validity periods than paper vouchers, so caution is necessary. If a purchased gift certificate is not used within the validity period and the five-year statute of limitations for commercial claims has not passed since the issue date, consumers can request a refund of 90% of the purchase amount by verifying the issue date. If consumer damage occurs, consumers can apply for consultation or damage relief through Consumer24 or the 1372 Consumer Counseling Center with transaction details and supporting documents.

However, the Korea Consumer Agency's role is to mediate disputes between consumers and businesses, so unlike court rulings, its decisions are not binding. Therefore, if a business ignores recommendations and mediation, civil litigation procedures must be pursued. If the case involves a small claim under 30 million KRW or belongs to socially vulnerable groups, consumers can use the consumer litigation support system. A Consumer Agency official stated, "If a case rejected due to business refusal meets certain conditions, consumers can receive litigation support from the Consumer Agency after review by the Consumer Litigation Review Committee," adding, "We strive to realize consumer rights through the litigation support system that supplements the lack of legal enforceability."

Experts advise that urgent measures are needed as cases of gift certificate-related damages increase. Professor Eun-hee Lee of Inha University’s Department of Consumer Studies said, "Recently, many gifticons are being purchased, and their use is expected to increase further," suggesting, "It would be more effective than punishment or regulation for the government to regularly disclose companies with high consumer damage so that consumers can be informed." Professor Kyung-ok Heo of Sungshin Women’s University’s Department of Consumer Lifestyle emphasized, "Since there are limits to legally enforcing businesses’ payment obligations, consumers should carefully check regulations, deadlines, and terms beforehand," adding, "Businesses should refrain from marketing that breaks consumer trust, such as promotions that make refunds impossible."