Enticed by "Free Laptops," Consumers Suffer Losses... Bundled Funeral Service Products See Surge in Penalty Disputes

162 Consumer Complaints Filed Over Past 3 Years, Says Korea Consumer Agency
Excessive Charges Upon Contract Cancellation Among Reported Damages
65% of Investigated Companies Found to Have Capital Impairment
Concerns Persist Despite "100% Refund at Maturity" Promises
"Check the Financial Status of the Company Before Signing Up"

The Korea Consumer Agency announced on the 23rd that, according to its investigation of 27 bundled funeral service products that combine funeral services with electronic devices, there have been numerous cases where consumers were charged for product purchase costs or penalties upon contract cancellation, highlighting the need for consumer caution.

Bundled funeral service products are offerings that package funeral services (prepaid installment contracts) together with appliances or electronic devices as "bundled products" (installment sales contracts), which are structured as separate installment agreements. The survey found that, among the monthly payments made by consumers during the early stage of the contract (within 60 installments), in 48.2% (13 products) of the cases, the proportion allocated to the funeral service was less than 5%, indicating that the vast majority of the payments were for the bundled product itself.

An analysis of 159 out of 162 cases related to bundled funeral service products, reported to the Korea Consumer Agency over the past three years (from 2022 to last year) where the age group was identified, showed that individuals in their 20s accounted for the largest share at 37.1% (59 cases), followed by those in their 30s at 23.9% (38 cases).

While it is generally known that funeral service-related damages are most common among those in their 50s or older, the high incidence of bundled funeral product damages among younger consumers (those in their 20s and 30s) is attributed to the recent increase in bundled products targeting this demographic, particularly those involving electronic devices. In fact, an analysis of 142 cases where the bundled product type could be identified revealed that laptops accounted for the largest portion at 31.0% (58 cases), followed by smartwatches (19 cases) and wireless earphones (18 cases).

In terms of damage types, "payment disputes due to contract cancellation" were the most common, accounting for 58.0% (94 cases). Of these, 88.3% (83 cases) involved disputes over excessive charges or penalties related to the bundled product upon contract cancellation.

According to the Consumer Protection Guidelines for Prepaid Installment Transactions (Fair Trade Commission Regulation No. 451), prepaid installment business operators are advised to refrain from promising to pay refunds in excess of the total amount paid under the prepaid installment contract (funeral service). However, 96.3% (26 out of 27) of the products investigated included a promise to refund the bundled product purchase cost upon maturity. Considering that the purchase cost of electronic devices is paid to the bundled product seller, this means that funeral service companies are selling products under conditions that require them to refund amounts they have not actually received.

Additionally, 65.2% (15 out of 23) of the funeral service companies selling products with maturity refunds were found to be in a state of capital impairment, raising concerns that if the business closes or its financial condition deteriorates, it may not be able to return the promised refunds to consumers.

Furthermore, a survey of 500 consumers found that among the 440 respondents who said they received an explanation about the bundled product, 90% (396 people) reported experiencing incomplete sales, such as not being properly informed that the bundled product sales contract was separate from the funeral service contract. Additionally, 18.8% (94 people) of respondents reported having suffered damages from bundled funeral service products. The most common issue, experienced by 54.3% (51 people), was being refused withdrawal from the funeral service contract on the grounds that the bundled product had been opened. Another common issue, reported by 52.1% (49 people), was being told at the time of contract that the bundled product was a free gift, only to find themselves making monthly payments for it after signing the contract.

The Korea Consumer Agency advised, "When signing up for a bundled funeral service product, consumers should fully understand the key details, including the payment period, amount, and refund criteria for each contract," adding, "Consumers should regularly check the financial status of the company, not only before entering into a contract but also after signing up."