Why SK Telecom Is Hesitating Over 300,000 Won Per Person Compensation for Personal Information Leak [Invest&Law]

Personal Information Dispute Mediation Committee Recognizes Psychological Damages
High Likelihood of SK Telecom Rejecting Mediation Proposal
Compensation Could Snowball Far Beyond 1.2 Billion Won

Jaeheon Jung, CEO of SK Telecom. Photo by Dongju Yoon

The Personal Information Dispute Mediation Committee (the Committee) has put SK Telecom in a difficult position with its decision to award damages. On November 3, the Committee held a plenary session and decided that SK Telecom should pay compensation of 300,000 won per person to approximately 4,000 applicants in a large-scale personal information leak case. The Committee determined that the applicants suffered psychological damages due to anxiety over mobile phone cloning and the confusion and inconvenience experienced during the USIM replacement process. The total amount of compensation reaches 1.2 billion won.

The Committee has notified both the applicants and SK Telecom of the mediation proposal, and they must respond within 15 days to indicate whether they accept it. If either party does not accept the proposal, the mediation will not be established. While SK Telecom is reportedly still considering whether to accept, industry observers believe it is unlikely that the company will do so. In September, SK Telecom indicated its intention not to accept the proposal by failing to submit an opinion regarding the Korea Communications Commission's Dispute Mediation Committee's recommendation to extend penalty exemption.

The reason SK Telecom is expected not to accept the mediation proposal is not solely because of the 1.2 billion won in compensation. Even if the mediation is established, the case would not be closed, as additional applications from other victims would still be possible. If all SK Telecom subscribers (23 million people) were to claim damages, the total compensation could reach 7 trillion won. In addition, the act of paying compensation could influence court rulings in several damages lawsuits already filed regarding the SK Telecom hacking incident.

A notice about USIM stock depletion is posted at an SK Telecom agency where a subscriber USIM information leak incident occurred. Photo by Yonhap News

SK Telecom expressed regret, stating that the Committee's decision did not sufficiently reflect the company's efforts to resolve the incident and provide compensation, such as offering free USIM replacements, penalty exemptions, and discounts. SK Telecom also announced plans to invest 70 billion won in security over the next five years.

Meanwhile, there was a precedent in 2021 where the Personal Information Dispute Mediation Committee decided on compensation of 300,000 won per person. At that time, a group dispute mediation application was filed against Meta, the operator of Facebook, for providing member information to a third party. The Committee ordered Meta to pay 300,000 won each to 181 applicants and proposed that the applicants be allowed to view the identities of the third parties who received their personal information, as well as the types and details of the information provided. However, Meta sent an email stating it would not accept the proposal, resulting in the mediation not being established.