[First View] Penalty Fee Waiver Controversy: SKT Must Resolve the Issue Themselves

Diverging Interpretations Over "At-Fault" Clause
Penalty Fee Waiver Could Cost Up to 3 Trillion Won
Need for Practical Compensation Plan Like in the US

The terms and conditions that most people skimmed over when signing up with SK Telecom have suddenly become common knowledge across the nation due to an unexpected incident. The most talked-about clause after the hacking incident is Article 43, Paragraph 4, which states that the penalty fee is waived if the contract is terminated due to the company's fault. This clause has become the basis for pressure on SKT to waive penalty fees for subscribers who wish to switch to another carrier. Not only did SKT expose the personal information of 25 million people, but it also triggered a massive crisis over USIM card replacements. For SKT, now seen as the party at fault, the idea that the company is responsible has become an unquestioned assumption among subscribers.

Despite these circumstances, SK Group Chairman Chey Tae-won (who said on the 7th, "We need to consider both user fairness and legal issues") and SKT CEO Yoo Youngsang (who said on April 30, "We will review the matter comprehensively and legally") have yet to provide a clear answer. What is the reason behind their reluctance to give a definitive response? Legal experts say that it is necessary to first determine whether SKT is truly at fault. In simple terms, the question is whether this hacking incident was an unavoidable act of nature that occurred despite SKT taking security measures on par with other companies, or whether it was a man-made disaster caused by insufficient security measures and a complacent response.

The fact that waiving the penalty fees could inflict massive losses on SKT is also a reason for the delayed response. SKT estimates that if 1 million subscribers switch to other carriers, the company could lose at least 1.3 trillion won and up to 3 trillion won. This could wipe out one to two years' worth of operating profit in a single blow. It is not just SKT that would be affected. If partners, agencies, and retailers are also shaken, tens of thousands of employees could suffer domino effects.

This is not a matter that the chairman or CEO can decide unilaterally. Under the Commercial Act, major company decisions must be approved by the board of directors. Ignoring this procedure and responding would be an illegal act. There is also a high likelihood that waiving penalty fees will lead to fairness issues among customers. If both those with only one month left on their contract and those with a year remaining are exempted from penalty fees, the former may feel unfairly treated.

While it is true that there are many factors to consider in deciding whether to waive penalty fees, it is not an issue that can be postponed indefinitely. The National Assembly hearing on the SKT hacking incident, scheduled for May 8, can be described as a "penalty fee waiver hearing," given the political community's obsession with this issue. Vague answers such as "we will review the matter" will not be enough to avoid pressure from lawmakers, and could further erode customer trust. It is SKT's responsibility to at least announce by when it will decide whether the penalty fee waiver is "possible" or "impossible." The company must first resolve the heated debate over penalty fees in order for the National Assembly, the government, and SKT to move on to the next steps: investigating the hacking incident and establishing preventive measures.

Coincidentally, US carrier T-Mobile began paying settlements this month for a hacking incident four years ago that exposed the personal information of about 76 million customers. The settlement amount is determined based on the time customers spent on security measures such as account freezes after the hacking occurred in August 2021. Customers who provide proof of such measures can receive up to $25,000, while those who do not can receive up to $25. If alternatives to waiving penalty fees are needed, this could serve as a useful reference.