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Korea Federation of Housewives' Clubs (KFHC)
Complaints about unfair pension reservations and contract terms increase as summer vacation season enters full swing
The Korea Federation of Housewives' Clubs (KFHC, Chairman Kim Cheon-ju) announced that it has decided to issue a special warning requiring consumers to be cautious, as it had received a growing number of claims concerning unfair trade practices concerning the cancellation of pension reservations from July 12 to 19, when the rainy season started in earnest.
In particular, 12 disputes were reported to the KFHC on July 18-19, after the holidays ended. As people tried to cancel their reservations and ask for a refund due to the heavy rains which fell from July 15-17, pension operators refused to cancel the reservations and some of them asked consumers to pay an excessive cancellation penalty, based upon the terms of the contract set by the operators.
※ Disputes relating to travel services received from July 12 to 19
|
Type |
Excessive penalty for cancelling pension reservations |
Cancellation of package trips prohibited |
Disputes involving airfare |
Total |
|
No. of Cases |
12 |
2 |
2 |
16 |
The provisions of the Consumer Compensation Rules regarding accommodation stipulate as follows:
In all of the 12 cases referred to above, the pension reservations were cancelled by consumers due to heavy rains. In the case of cancellations made one day prior to the arrival date, 20% of the total cost should be charged as a penalty and the remainder should be refunded, while in the case of cancellations made 2 days prior to the arrival date a penalty of 10% should be charged and the remaining 90% refunded. The full deposit should be refunded in cases where cancellation of the reservation was made 5 days prior to the arrival date.
Disputes regarding pension reservations and cancellations are summarized below.
|
Content |
No. of Cases
(Total of 12 cases) |
Details (Major Cases) |
Reference
(Consumer Compensation Rules) |
|
1. Cancellation 5 days prior to trip start date |
3 |
Case 1) Refund policy differs for off-season and on-season; a 10% penalty was charged instead of giving a full refund. |
Full refund |
|
Case 2 & 3) A penalty was charged. |
|
2. Cancellation 2 days prior to trip start date |
4 |
Case 1 & 2) None of the deposits was refunded
-> disadvantageous to consumers as the deposit is equivalent to 50% of the total trip cost. |
10% of the trip cost should be paid as a penalty. |
|
Case 3 & 4) None of the deposit was refunded. |
|
3.
Cancellation 1 day prior to trip start date |
1 |
Case 1) Disputes arose as the travel agency asked consumers to pay the entire trip cost as a deposit when the contract was made, but refunded only 50% of the amount.
-> Only 20% of the total trip cost should be paid as a penalty, and the remaining 80% should be refunded. |
20% of the trip cost should be paid as a penalty.
|
|
4.Cancellation on trip start date |
4 |
Case 1 & 2) No refund.
-> 30% penalty should be paid. |
20% of the trip cost should be paid as a penalty. |
|
Case 2 & 3) The full trip cost was paid as a deposit and the trip was cancelled on the trip start date. None of the cost can be refunded.
-> 30% of the total trip cost should be paid and the remaining amount should be refunded. |
30% of the trip cost should be paid as a penalty. |
With regard to cancellations made on the trip start day, even though consumers were forced to cancel the trip due to the possibility of natural disasters occurring during the holidays, they had to incur all the losses arising from the cancellation because there were no separate rules or provisions in the contract regarding cancellations due to natural disasters.
Pensions sprang up rapidly and provided alternatives to hotels and private houses. With the introduction of the 5-day working week, however, the demand for pensions sharply rose, resulting in disputes due to the absence of standard terms of contract or consumer protection regulations.
The KFHC conducted a survey in the summer of 2004 on pensions operating a website. According to the survey, 80% of the 100 pensions surveyed asked for a deposit amounting to more than 50% of the total cost to make a reservation, and 47% of them required that the full cost be paid as a deposit. If consumers pay an excessive or full amount of deposit for reservation, it is more difficult to get a refund in the event of cancelling the reservation.
The demand for travel has been increasing rapidly - not only during holiday seasons but also on weekends - since the five-day working week was introduced. Consequently, highways get packed with cars rushing out of town, starting as early as Friday evening. As has been pointed out repeatedly, consumer protection regulations governing a variety of specific issues and standard contract terms need to be set in order to protect consumers from unfair trade practices that occur repeatedly.
▶ For more information, please call Kim Sun-bok of the Consumer Protection Team at 02-752-4227~9. | 
