"Special Class 30% Discount" Promised... Fair Trade Commission Issues Correction Order to Korail

Only reflected in discounted fares but displayed as if fully applied
Suspected violation of the Act on Labeling and Advertising... No fine imposed

Korea Railroad Corporation (KORAIL) received a corrective order from the Fair Trade Commission after displaying the discount rate for KTX first-class seats as higher than it actually was.

On the 23rd, the Fair Trade Commission announced that it decided to impose a corrective order (future prohibition order) on KORAIL for violating the Act on Labeling and Advertising (deceptive labeling and advertising). KORAIL is accused of engaging in deceptive labeling and advertising by omitting or downplaying important facts that influence purchasing decisions while displaying and advertising discount rates for KTX tickets from October 29, 2014, to November 3, 2021.

KORAIL displayed discount rates such as "↓ 30% discount" and "↓ 20% discount" on its website and mobile application (app). Consumers could perceive from this that the amount they have to pay is reduced by that percentage, but the actual discount rates for KTX first-class and premium seats were lower than those displayed.

Provided by the Fair Trade Commission

The price of KTX first-class and premium seats consists of "fare" (the charge for passenger transportation) and "surcharge" (the charge for wider seats, about 40% of the fare). The discount rate displayed by KORAIL applied only to the "fare" portion. For example, when advertising a 30% discount on a KTX first-class ticket between Seoul and Busan priced at 83,700 KRW, the surcharge of 23,900 KRW was not discounted, so the consumer’s final purchase price was not a 30% discount but a 21.4% discount, amounting to 65,800 KRW. The Fair Trade Commission judged that this method of display could mislead consumers and hinder reasonable purchasing decisions, constituting deceptive labeling and advertising.

However, the Fair Trade Commission did not impose a fine, considering that KORAIL immediately corrected the deceptive labeling and advertising after it was exposed by media reports in 2021, that some parts of the related information were displayed, and that there was no intentional wrongdoing. Therefore, it was not regarded as a serious violation.

A Fair Trade Commission official stated, "Even if the facts can be confirmed through laws, regulations, or terms and conditions, it is significant that we clarified that unfairness is judged based on the overall impression that an ordinary consumer with normal attention would have when receiving the labeling and advertising." The official added, "We expect that more careful attention will be paid to the content of discount rate labeling and advertising in the future."