Korea National Council of Consumer Organizations

KNCCO (Chairperson: Ju Gyeong-Sun) is running the “Seoul COVID-19 Win-Win Arbitration Center” (SCWAC) with the Seoul Metropolitan Government for a limited period from March 27^th to May 6^th, in order to resolve the disputes that have been frequently arising from penalties in three sectors, i.e. travel (airline/accommodation), weddings and food services, for Seoul citizens and the businesses located in Seoul. We analyzed the complaints accepted by the SCWAC for 4 weeks, from March 27^th to April 24^th.

■ The number of complaints related to weddings (54.0%) was the highest, followed by food services (24.7%), and travel (21.3%)

From a total of 174 cases, 37 cases (21.3%) were related to the travel business, 94 cases (54.0%) to the wedding business, and 43 cases (24.7) were related to the food service industry. 99 cases (56.9%) were resolved by “providing information”, and 75% (43.1%) of cases were resolved by “arbitration”. For each sector, 16 cases (43.2%) were resolved by “providing information” and 21 cases (56.8%) were resolved by “arbitration” in the travel business; 66 cases (70.2%) vs 28 cases (29.8%) in the wedding business; and 17 cases (39.5%) vs 26 cases (60.5%) in the food service industry. Although weddings usually require a large down payment and expenses and, of the three sectors we examined, had the most consumers who filed the complaints, the number of these cases resolved by “providing information” was greater than the number of cases resolved by “arbitration”; thus, it can be concluded that these damages are large and the consumers are very dissatisfied.

■ All three industries are disadvantageous to consumers if they request a contract termination and a refund; while agencies are putting a great burden on consumers by applying their own terms and conditions separately from the dispute resolution standards.

Of total 174 cases, the three things most demanded by consumers were contract terminations (40.9%), refunds (23.6%), and price adjustments (13.2%). In relation to each sector, the most frequent demand in the travel business were refunds (48.6%), contract terminations (37.8%), price adjustments (5.4%) and penalty adjustments/refunds (5.4%). Specific cases include the following: a consumer wanted to cancel travel plans because it was impossible to leave the country due to the current entry restrictions, but the travel agency refused to refund or requested the payment of separate fees. In other cases, the agency agreed to issue a refund, but proposed providing a voucher instead of cash, or claimed a penalty based on the special agreement. Each travel agency had different arrangements, which further increased the inconvenience and confusion for consumers.

The most frequent demands in the wedding business were contract terminations (37.2%), price adjustments (19.1%) and penalty adjustments/refunds (13.8%). More consumers asked for a price adjustment compared to those in the other two sectors, because many wedding agencies offered new terms that were far more unfavorable to consumers compared to the previous terms made before the COVID-19 crisis, by taking advantages of the fact that couples usually asked to postpone rather than cancel the wedding itself. In addition, there are many couples who were forced to cancel their wedding due to an increase in the rental fees and excessive penalties. In the food service industry, the most common demands were contract terminations (51.2%), refunds (34.9%), price adjustments (7.0%) and penalty adjustments/refunds (7.0%). Most of complaints in relation to food services are related to reservations for first birthday celebrations. Specific cases include the followings: an agency asked a consumer to pay a much high penalty than the down payment when the consumer requested cancelling the reservation and a refund. In another case, the consumer wanted to reduce the number of attendees, but was asked to pay for all the meals for the attendees she had booked in the first place. Even though the agency demands are clearly unfair, the requests of the consumers are never accepted and they have no choice but to respond to these demands because the agencies apply their own terms and conditions, which are far more strict than the dispute resolution standards.

■ Due to the COVID-19 crisis, it is necessary to amend and supplement the dispute resolution standards to minimize consumer damage

After looking into how to arbitrate the cases for each sector, of total 75 cases resolved by “arbitration”: no settlement was reached in 40 cases (53.3%); a refund was agreed in 11 cases (14.7%); the obligation under the contract was fulfilled in 10 cases (13.3%); the dispute passed to the Autonomous Mediation Committee in 4 cases (5.3%); and the dispute was still ongoing in 8 cases (10.7%). In relation to the travel business: no settlement was reached for 42.9% of purchasers; a refund was agreed for 14.3%; and the dispute passed to the Autonomous Mediation Committee for 9.5%. of consumers. For the wedding business: no settlement was reached for 60.7%; the obligation under the contract was fulfilled for 17.9%; the dispute passed on to the Autonomous Mediation Committee for 7.1%; and a refund was agreed for 7.1% of consumer. Finally, for the food service industry: no settlement was reached for 53.8% of customers; a refund was agreed for 23.1%; and the obligation under the contract was fulfilled for 15.4%. “No settlement was reached” means that the staff tried several times to mediate between the consumer and the agency, but this process failed because neither side was willing to make concessions. “The obligation under the contract was fulfilled” indicates that the consumer was able to postpone the contract (travel, wedding, or food service) under the terms previously agreed. We need a solution for this low success rate, despite the aggressive attempts of the staff from these agencies.

Seoul establishes a public-private governance authority model for each local government, in order to find proper remedies for consumer damage