Company A Withdraws from Business, Halts Services
Some Customers Consider Lawsuit over Forced Contract Termination
Legal Framework for Dispute Resolution Remains Inadequate
Procedures for Refunds and Exchanges Remain Unclear
No Item-Specific Standards for Appliances Like Refrigerators
Parts Retention Periods Often Not Observed
New Standards Needed for Responsibilities and Rights
While the 'rental' market for home appliances is rapidly expanding in the form of 'subscriptions', led by major corporations such as LG Electronics and Samsung Electronics, the legal framework to support this trend remains inadequate. In particular, concerns are being raised over the lack of legal mechanisms to protect consumers who use home appliances through long-term rentals.
According to the home appliance industry on the 30th, a major conglomerate affiliate, referred to as Company A, has been experiencing a series of disputes with customers regarding its food waste processor rental service. Company A withdrew from the kitchen appliance business in October of last year and subsequently ceased production of parts for the related products. As a result, the company is currently unable to provide after-sales service (AS), such as repairs, to long-term rental customers.
Consumers who chose the rental service based on advertisements promising 'free after-sales service' have received sudden notifications of service discontinuation, and some claim they were subjected to unilateral 'forced contract termination'. Some customers are reportedly considering filing a class action for damages.
An industry insider stated, "In the case of direct purchases, procedures for refunds, exchanges, or penalties are relatively clear, but rental contracts have ambiguous standards, making it difficult for companies to respond." The insider added, "The lack of detailed provisions addressing rental situations in the consumer dispute resolution standards is making the situation even more complicated."
Consumers Exposed to Risks of Long-Term Rentals
Although Company A's case stemmed from the special circumstance of business withdrawal, the fundamental issue is that rental consumers have been exposed to disputes from the outset without legal protection mechanisms.
Currently, when consumer disputes arise, companies refer to the 'Consumer Dispute Resolution Standards' announced by the Anti-Corruption and Civil Rights Commission and published by the Korea Consumer Agency. However, most of these standards are detailed for cases of 'direct purchase' of products, and for 'rental', only general dispute resolution methods are listed under the 'long-term goods rental service' category, making practical application difficult.
In particular, only a limited number of items, such as water purifiers and massage chairs, are provided as examples, and there are no item-specific standards for major appliances like refrigerators and washing machines. This is seen as unfair, especially when compared to other high-value rental items such as automobiles. Many argue that because appliance malfunctions can directly disrupt daily life, it is unreasonable to apply general rental standards across the board.
Bae Hyangmi, an attorney at Shinwon Law Firm, pointed out, "Rental services are structured so that consumers bear the risk of the company's continued existence. The potential for damage is higher than with one-time purchases, yet the safeguards are weak." Jin Chaehyun, an attorney at Daehan Jungang Law Firm, said, "If there are no clear standards, consumers who suffer ambiguous damages will be left to bear the full burden due to insincere companies. It is urgent to establish detailed and applicable standards."
As More Businesses Close, Parts Preservation Becomes a Blind Spot
According to industry analysis, disputes related to rentals are increasing further as the era of 'AI home appliances' equipped with artificial intelligence (AI) features begins. As the release of new products with advanced features becomes more frequent, the number of cases where businesses are discontinued midway is also rising. When parts production for discontinued products ceases after a business withdrawal, consumers who have rented these products long-term are left unable to obtain repairs.
The current 'Consumer Dispute Resolution Standards' stipulate that, even in special cases such as business withdrawal, companies must retain parts for each appliance category for 5 to 8 years. However, in practice, many companies do not strictly comply with this requirement, and regulatory authorities often take no additional action if parts are secured only for the warranty period (1 to 2 years), according to field sources.
The industry is concerned that such institutional shortcomings could lead to even bigger problems in the future. In the case of the home appliance subscription businesses recently launched in earnest by LG Electronics and Samsung Electronics, the product usage period has not yet exceeded 5 years, so repair demand has not yet become significant. However, once product malfunctions become a reality, the same problems are likely to recur. LG Electronics began its subscription business focused on large appliances in 2022, and Samsung Electronics started in December of last year. Although subscriptions are nominally a new service, they are essentially an extension of rentals and thus fall into the same legal gray area. Hong Seokhyun, an attorney at Juwon Law Firm, stated, "As this new type of service is growing rapidly, new standards are needed to clarify the responsibilities of service providers and to substantively guarantee consumer rights."
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