Fair Trade Commission: "Sangjo Companies Must Notify Consumers of Advance Payments"

Legislative Notice Until the 25th of Next Month

From now on, prepaid installment transaction operators such as funeral service companies must notify consumers of the number of times and amounts of advance payments received.

On the 15th, the Korea Fair Trade Commission announced that it will conduct a legislative and administrative notice until the 25th of next month for the amendment of the "Enforcement Decree of the Installment Transactions Act," "Enforcement Rules of the Installment Transactions Act," and "Consumer Protection Guidelines in Prepaid Installment Transactions," which specify the notification obligations related to advance payments for consumers by prepaid installment transaction operators and revise the grounds for imposing fines.

This amendment is a follow-up measure to the revision of the Installment Transactions Act in March, which introduced notification obligations to strengthen consumer protection and revised the grounds for imposing fines.

Accordingly, starting from April next year, prepaid installment transaction operators must notify consumers who have signed prepaid installment contracts at least once a year of the amount paid, number of payments, contract date, and other details. Notifications can be made via phone, email, text message, KakaoTalk, etc., and prepaid installment transaction operators must keep records of notifications for five years.

Until now, it was not mandatory to provide information such as payment amounts and the number of payments to consumers who subscribed to prepaid installment products such as funeral services and cruises. It was difficult for consumers to check payment details unless they inquired directly. Moreover, these products typically have an average contract payment period of about 10 years, making it difficult for consumers to remember the fact of contract signing or key contract details.

A Fair Trade Commission official said, "Once the amendment of the enforcement rules and guidelines is completed, about 7.57 million consumers who subscribe to prepaid installment products will receive information such as payment amounts and number of payments at least once a year starting next year," adding, "Through the amendment of the enforcement decree, the standards for imposing fines related to non-attendance at investigations, failure to submit materials, and obstruction of investigations will be specified, and the criteria for repeated violations related to business suspension will be clarified, which is expected to enhance the predictability for prepaid installment transaction operators who are the subjects of compliance."

The Fair Trade Commission plans to collect opinions from stakeholders and related ministries during the legislative and administrative notice period and complete the revision of laws and administrative rules in the installment transaction sector within the second half of this year through the legislative process.

[Image source=Yonhap News]