Home
Korean Sitemap
 


No.469 2004.10.14 Seoul YMCA Citizen`s Mediation Center
Beware of pyramid vendors’ refusal to refund (Non-issuance of deduction voucher, omission from sales)


No. 469, published on 14 October 2004 / Korea National Council of Consumer 
                                                          
Organizations

 

Seoul YMCA Citizen`s Mediation Center

Beware of pyramid vendors’ refusal to refund (Non-issuance of deduction voucher, omission from sales)

 

More and more consumers suffer damages as multilevel marketing companies do not fully observe the compensation insurance system, designed to efficiently relieve consumer damages to eliminate the general public’s distrust and concern. The Act on Door to Door Canvassing Sales Etc. (Article 34 Consumer Compensation Insurance Contract Etc.) stipulates that the consumers are relieved of damages with the insurance, when the multilevel marketing companies delay acceptance of returns or become insolvent, by making it mandatory for the companies to purchase ‘Consumer Compensation Insurance.’ At present, two cooperatives – Direct Selling and Special Selling Mutual Aid Cooperatives – handle the above compensation insurance. Accordingly, sales representatives are issued ‘Mutual Aid Warranty Notice’ when they buy goods. They may also inquire the Mutual Aid Number through the website of the Cooperatives. However, many consumers experience difficulties in mutual aid and the insurance system does not produce real achievements, since the vendors fail to issue the Mutual Aid Certificates or intentionally omit them during sales. Mutual Aid Warranty Notice is usually mailed in two to three days from purchase. It indicates the Cooperative name, warranty period, sale date, amount and Warranty No.

 

 

Case 1) Mutual aid certificate not issued: Unable to get compensation or refund through the Mutual Aid Cooperative

 

Though I purchased 3 million won worth of goods after registering with the multilevel marketing company, when I checked the Mutual Aid Certificate on the Cooperative website after deciding to return the goods for a refund, I found out the name for the sale was recorded with the salesman’s name instead of mine.

 

Case 2) Intentional omission from sales: Amount to get compensated through the Cooperative is reduced

 

Though I purchased 90 million won worth of goods, when I checked the Certificate, the Mutual Aid Certificate has been issued for 10 million won.

 

 

The sales representative cannot be compensated for damages if the Mutual Aid Certificate is not issued. The compensation amount is reduced by the sales amount if it is omitted from sales. Seoul YMCA and Anti-Pyramid Campaign Headquarters believe the above acts of multilevel marketing companies can be considered as refusal to accept returns.  The two groups consider this to be the cause of increase in consumer damages, and plan to operate a special counseling office, conduct monitoring, and perform legal reviews of the damage cases.

 

⊳       Information: 02-733-3181 / 02-805-2860

 



#524, #525, 47, Sejong-daero 23-gil, Jongno-gu, Seoul (Postal code: 03182)
  TEL 82-2-774-4050   FAX 82-2-774-4090   E-mail: sohyub@consumer.or.kr