Preference for adding more key money
Must acknowledge violation of Personal Information Protection Act
A 31-year-old woman named Kim Aran, living in Dongjak-gu, Seoul, recently received a text message about an 'opening commemorative discount event' from an unfamiliar Pilates shop. The shop was one that Kim had briefly attended a year ago, but the original owner had transferred the business to someone else, along with the contact information of existing members, including Kim.
Kim said, "I was puzzled because I kept receiving texts several times a week from a place I had never visited. Then I found out that my personal information, along with that of other members, had been handed over intact." She lamented, "The place I registered with was the original shop, so isn't it illegal to transfer personal information without permission?"
In businesses such as gyms, Pilates studios, and nail salons, it has become common practice to transfer the 'regular customer list' containing existing members' personal information when handing over the business. Experts point out that in industries where member management is crucial, there may be a low awareness of the illegality of buying and selling personal information, and they emphasize the need to recognize that this is clearly illegal.
On the 18th, a marketplace site specializing in the transfer and acquisition of gyms and Pilates studios was reviewed, revealing that most listings highlighted geographical advantages such as proximity to subway stations and densely populated residential areas to promote high customer inflow rates. Some even hinted at personal information transactions by stating, "Upon acquisition, we provide the entire customer database (DB) currently held." Since member management is central to the operation of gyms, Pilates studios, and nail salons, insiders explained that the goodwill price can be increased on the condition that existing members' names, contact information, addresses, and other details are transferred together.
An agent responsible for transfers and acquisitions in the startup sector said, "Depending on the location, assuming the goodwill price for a 13-pyeong (approximately 43 square meters) shop in Seoul is 15 million KRW, an additional 2 to 3 million KRW can be charged for transferring the member DB. Because customer management is so important in this industry, listings that include the member DB tend to sell faster."
Such frequent transactions involving members' personal information in certain industries constitute violations of the Personal Information Protection Act. According to current law, when providing personal information of data subjects to third parties, consent from the data subjects must be obtained, and the purpose of use must be disclosed. Additionally, information must not be used for purposes other than those for which it was collected. Violations may result in fines of up to 3% of total sales revenue.
At the franchise startup expo held at COEX, employees are demonstrating equipment exhibited by a Pilates education company. Photo by Younghan Heo younghan@
Experts point out that illegal personal information transactions have become a common practice in the fitness and beauty service industries, where customer competition has reached its peak due to market saturation. According to the Ministry of SMEs and Startups' survival rate data for startup companies, the industry with the highest '5-year closure rate' last year was 'Arts, Sports, and Leisure Services' at 77.7%. This means that 8 out of 10 businesses close within five years of opening.
Professor Choi Kyung-jin of Gachon University's Department of Law emphasized, "Pilates and gym studios consider regular customer management as the core of their business. Since customer information directly translates into sales, the buying and selling of information has become more widespread. When signing transfer and acquisition contracts, even if existing customer information is transferred, the customers must be informed that their information is being handed over, and they must be notified of their right to withdraw if they do not consent."
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