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11 member organizations of the Korea National Council of Consumer Organizations (KNCCO) announced the ‘2018 Top 10 Consumer News’ at the close of the year 2018.
This year, more attention to consumer safety ever before, as damages and shocks to consumers have spread due to the detection of radioactive hazardous materials following the Daejin Bed Company affair. In addition, problems have been revealed in relation to a lax social infrastructure for safety management that have increased consumer anxiety, such as the fire that occurred at KT Company, the accident involving a heating pipe rupture at the Baekseok Station, and the KTX derailment accident. The BMW incident, which caused public rage following the company’s delayed recall and lukewarm response, was an affair that reminded us of the urgent need for legal reforms and for the promotion of consumer rights by the recognition of punitive damages.
Unresolved consumer problems are accumulating.
The Consumer Policy Review Committee has been upgraded and now belongs to the Prime Minister’s Office, but consumer rights have not yet been realized. The Korea National Council of Consumer Organizations will endeavor to secure consumer safety and to realize damage relief by holding debates and conducting relay campaigns, in order to introduce a class action system and to relay campaigns through press conferences.
The ‘2018 Top 10 Consumer News’ items selected by the KNCCO were as follows:
1. Relay campaign for consumer class actions and the introduction of class actions
2. Calls for a constitutional amendment to realize consumers’ basic rights and to promote their rights
3. Incomplete settlement of the Daejin Bed affair and the detection of radioactive hazardous materials Spread of consumer damage and shock
4. BMW car fire incidents and punitive damages
5. The government has begun to regulate disposable products after the chaos involving recyclable garbage, resulting in changes to consumer life
6. Superfine dust has emerged as a direct health issue
7. Lax Safety Management of the Social Infrastructure (KT Corporation fire, urban piping, railroad, oil storage, etc.)
8. Consumer Policy Review Committee has been Upgraded to include the Prime Minister’s Office
9. Grievances among the public increased due to a hike in prices for dining-out and housing
10. Ensuring basic energy rights for the heat waves caused by climate change
With the expectation that these issues will continue to affect Korean society next year as well, the KNCCO will continue performing its role of claiming/protecting consumer’s rights across multiple fields. In addition, it will prevent consumer damage due to unfair trade practices, and will take the lead of building an appropriate economic society, in which consumer trust is incorporated and consumers’ interests are preserved.
1. Relay campaign for consumer class actions and the introduction of class actions
After the disaster involving the humidifier disinfectant, serious damage to consumers such as the radon bed affair and the carcinogen sanitary napkins, followed by the successive BMW fires, continued to happen in 2018! The compensation for consumer damages has not yet been properly achieved due to procedural difficulties and hassle, and due to the fact that these consumer damages are structural ones related to the modern society of mass production and mass sales, and are characterized as being numerous with small amounts. In response to this, the Korea National Council of Consumer Organizations has prepared the draft for a bill concerning consumer class actions and has moved the bill forward together with the National Assembly member Hak-yeong Lee. Beginning with a relay press conference designed for introducing the class action on September 17th, they continued the relay campaign in front of the National Assembly building with the aim of realizing the introduction of the class action and legalizing it.
2. Calls for a constitutional amendment to realize consumers’ basic rights and to promote their rights
In the 1980 Constitution, the provisions for consumers construed the consumers as “objects of enlightenment” and limited the consumer protection movement to “promoting the improvement of a product”. Consumers were not treated as subjects with dignity and value as human beings in the economic field, but were merely treated as one object for the purpose of economic development. More than 10 years have passed since the Consumer Basic Law was amended, and “the era of consumer sovereignty” was declared in 2016, but the basic rights of consumers are still not respected. In our modern society, as the importance of consumer rights has increased due to the advancement of science and technology and the consumer problems have become more complicated, consumers are recognized as not merely the objects of the national economy policy but as parties who should be directly concerned, and who should request that the state realize their basic rights and involve them in consultations in the course of pushing ahead with the consumer policies. The state and the local governments should establish an institution whereby a safe and happy consumer life will be ensured and balanced economic development can occur that should guarantee the recognition of consumer movements. To this end, the Korea National Council of Consumer Organizations has contended that the state should specify “consumer basic rights” as one of the constitutional basic rights and should guarantee a comprehensive consumer-led consumer movement.
3. Incomplete settlement of the Daejin Bed affair and the detection of radioactive hazardous materials Spread of consumer damage and shock
In May, the Nuclear Safety and Security Commission announced the results of a survey which revealed that the radiation exposure from Daejin Bed mattresses reached up to 9.3 times the standard level. A decision on the dispute settlement was made on September 30th, in which Daejin Bed, in whose beds the radon was detected, was ordered to “exchange the mattresses and pay compensation of 300,000 KRW to each consumer”. In the meantime, the consumers and members of the public had to suffer inconvenience for long time while feeling anxious as the radon mattresses were slowly identified and incompletely collected, stored, and disposed of. A total of 6,837 victims of the Daejin radon bed incident filed a dispute settlement through the Consumer Dispute Settlement Commission of the Korea Consumer Agency, and the settlement decision ordered the company to exchange the mattresses and to pay 300,000 KRW in compensation to 4,665 of the victims. However, as Daejin Bed refused to accept the arbitration results due to its being a civil lawsuit, the consumers ended up in a situation where they could only get relief through a long battle and litigation. Furthermore, as it was still unclear how much and in what manner they could be compensated, the consumer anxiety remained latent and the issue of radon detection has continued in relation to their everyday products, including pillows and masks, hot water mats and apartment bathroom materials, including the Casamia bed mattresses. During the year, the need for a stronger consumer safety policy clearly emerged.
4. BMW car fire incidents and punitive damages
In the BMW car fire incidents, more than 40 cars burned on the roads threatening both consumer safety and human lives! BMW cars were avoided because it was feared that not only the cars running on the road but also parked cars could cause a fire. The fire incidents involving BMW cars sparked the consumers’ anger due to an insufficient investigation of the defects followed by belated corporate recalls and a lukewarm initial response from the government. It was an incident that made the people aware of the “need for an improved recall system”. On November 5th, the government announced a plan to introduce punitive damages for consumers in the form of collective lawsuits and follow-up measures for consumer groups. In the wake of collective consumer lawsuits and consecutive calls for countermeasures from consumer groups, the government moved forward a bill on Nov. 5th to set the compensation as a maximum of five times the damage caused by the car defects, following the Sept. 6th announcement of a “plan to reform car recalls” that would also introduce punitive damages. It was also decided to shift the responsibility for proving the manufacturing defects to the car manufacturers that were free from the responsibility for proving vehicle defects prior to now.
5. The government has begun to regulate disposable products after the chaos involving recyclable garbage, resulting in changes to consumer life
Korea, which previously had the highest annual consumption of plastic (100 kilograms per person – as of 2016), started to regulate the use of disposable cups in August after the “recycling garbage chaos” occurred in April. After the serious problem of environmental hazards caused by hormones and disposable products such as micro-plastics was raised, policies aimed at reducing the use of disposable products were implemented worldwide, including in the European Union, which proposed a plan to ban the use of plastic in straws and cotton swab from 2021. Denmark, Sweden and Germany are now implementing a policy to return plastic with deposits, while Kenya has banned the use of disposables. In line with this trend, the government has introduced a policy to ban all disposable cups, which is being implemented at local coffee shops, and consumers are showing a change in their perception that they can afford to suffer inconvenience based on their growing awareness of the environmental hazards. The campaign to reduce disposable products among consumer groups along with consumers and citizens will continue.
6. Superfine dust has emerged as a direct health issue
Ultrafine dust, which is classified as a first-class carcinogen, has a diameter of 2.5㎛ (㎍) or less and has been known to lead to fatal respiratory diseases. Research has shown that this dust is even more dangerous to human health than was previously recognized, and the awareness of fine dust is growing. According to a survey conducted by the Seoul National University research team in June this year, it was estimated that 11,924 people died prematurely in 2015 due to ultrafine dust. The dust greatly affects other diseases besides respiratory diseases, with the most common being stroke, followed by heart disease and lung cancer. On December 8th, the University of Chicago’s Energy Policy Institute at Chicago (EPIC) released statistics on the reduction of a human lifespan due to the ultra-fine dust in each country. In 2016, the average concentration of ultrafine dust in Korea was 24 μg, which was 14 μg higher than the WHO safety standard, and the shortening effect on a lifespan was 1.4 years. The world’s average lifespan shortening due to ultrafine dust was 1.8 years, which was greater than the lifespan shortening (1.6 years) caused by smoking. To respond more strongly to the ever-worsening issue of ultrafine dust, the government has announced measures to strengthen fine dust management by requiring the private sector to have an alternate-day driving system. While issuing the emergency reduction measures that will start in February next year, preliminary reduction measures will also be implemented in cases when the air quality is feared to worsen. Nevertheless, people are unable to hide their anxiety over the steadily growing problem concerning fine dust and ultrafine dust.
7. Lax Safety Management of the Social Infrastructure (KT Corporation fire, urban piping, railroad, oil storage, etc.)
On December 17th, the government announced that it would conduct a full survey on the safety of the infrastructures managed by public institutions. This move was undertaken after the emergency light was lit on infrastructure safety following the KT Ahyeon Branch fire in an underground communication zone, as well as the old heating pipe rupture accident at Baekseok Station, the KTX Gangneung line derailment, and the death of a subcontract worker at the Taean thermal power plant, all of which occurred in quick succession. The effects of the survey remain unknown, as it began with a lack of fundamental measures for “safety check on the social infrastructure”, and people and consumers were gripped by fear that was beyond inconvenience and anxiety due to these accidents. In the case of the KT Corporation fire, the underground communication zone of Ahyeon Branch was the main communication facility area with 168,000 telephone lines and 220 sets of optical fiber cables installed for various local government agencies and enterprises crowded into this one site, but only one fire extinguisher installed and automatic fire extinguishing equipment including a sprinkler was not present. A fire at the Goyang oil storage, which was caused by a single wind lamp that was blown out by a foreign worker, was a close call that could have led to a massive disaster. This could have been prevented if more care had been taken by the company’s management. The rupture of a 27-year-old heat transport pipe near Baekseok Station in Goyang, where 100 °C water swept across the road, and the appalling KTX derailment that occurred just five minutes after departing from Gangneung Station, also serve as a reminder of the importance of regular safety inspections of social infrastructure facilities. The year 2018 was an uneasy year, due to a series of safety accidents involving social infrastructure facilities that directly affected people’s livelihoods. Careful safety measures should be taken by the government in order to prevent further unrest.
8. Consumer Policy Review Committee has been Upgraded to include the Prime Minister’s Office
On July 9th this year, the Head of the Consumer Policy Review Committee was upgraded from the Chairperson of the Fair Trade Commission to the Prime Minister, and a meeting chaired by the Prime Minister was held at the Seoul Government Complex. It was the first meeting held after the Chairperson of the Consumer Policy Review Committee was upgraded to the Prime Minister due to the revision of the Basic Consumer Law that occurred last October. The number of private members of the Consumer Policy Committee also increased greatly from five to fifteen. As such, the Consumer Policy Committee has been upgraded to involve the Prime Minister’s Office, leading to greater private-oriented participation in consumer policy decision-making, as well as better coordination of the cooperation among all government ministries for the purpose of enhancing the efficacy of the relevant policies. This has laid the groundwork for the Consumer Safety Control Tower, as the Consumer Policy Committee has been given the right to urgently respond to physical consumer accidents. Forty years have passed since the Consumer Protection Law was enacted in 1980, but consumer rights have yet to be adequately protected, with many tasks remaining as simply consumer policies. Prime Minister Lee Nak-yeon expressing his will saying: “I hope that the Consumer Policy Committee will function as a platform to lead our society to a consumer-centered society.” Consumer groups will also make efforts to ensure that the upgraded Consumer Policy Review Committee goes beyond the scope of consumer protection and becomes the main agent for the policy.
9. Grievances among the public increased due to a hike in prices for dining-out and housing
The rate of the price increase for home sales in Seoul, which soared to 1.25% in September, the highest level in the past 10 years, rose by 0.13 in November, down by 0.06% compared to last October. The real estate market fever is beginning to stabilize with the government’s successive real estate regulation policies, but the already inflated housing prices in Seoul and the capital area are adding to the hardships for ordinary people. Regular citizens, who cannot afford even to think of buying a home due to the loan regulating policy followed by the increase in the loan interest rate, are stuck preparing their rents and their burdens are on the rise due to the prevalent increase in the cost of living, which has followed the heat waves and the price increases for raw materials amid a low growth rate and a sluggish economy around the world. The prices of ramen, snacks and ice cream increased along with the surprising price hike at chicken franchises, as well as at the big three brands in the pizza industry. Ediya Coffee, the No. 1 coffee company in terms of the number of franchises, announced that they would raise the prices of some beverages by up to 15 percent. The price index for dining-out rose by 2.7 percent year-on-year in the January-October period this year, representing the largest increase since the 4.3 percent rise in January-October 2011, with the price of tteokbokki rising by 5.1 percent, beef rib soup by 5.9 percent, jajangmyeon by 4.4 percent and stir-fried rice by 4.0 percent. According to the results of a survey conducted by our Price Monitoring Center on the consumer perceptions of dining-out, 57% of consumers responded that they would reduce their frequency of dining-out if the prices continue to rise. We know that comprehensive and structural changes are urgently needed, as the hike in dining-out prices will lead to a shrinking of the consumption rate. Amidst the sagging economy, the cost hikes for raw materials, rent, and the minimum wage have been transferred to the consumer prices, which has resulting in a vicious cycle in which the blows are returning to the ordinary people. In addition, the price increase for dining-out perceived by consumers includes not only the price, but also a reduction in the benefits from restaurant operators who are reducing their operating costs. As the dining-out patterns have become more diversified, we will also need to have a comprehensive understanding that reflects not only the substantial prices but also the changes in consumer benefits and satisfaction.
10. Ensuring basic energy rights for the heat waves caused by climate change
We experienced the worst heat wave in 111 years, since the start of meteorological observations! This year, heats waves of more than 40 degrees occurred 6 times out of 7 times in the whole of our country’s history. 64% of the nation’s observatories have renewed their record highs this year, and the number of heat wave days also reached a record high of 31.2 days. It was a summer hotter than ever before. In addition to the death toll from heat strokes, livestock as well as fish and shellfish suffered massive deaths. In the aftermath of the heat wave, crop damages continued so that food prices and the cost of living, including electricity prices, fluctuated upward. Huge natural disasters hit not only our nation but also occurred all over the earth. In Japan, the number of deaths from heat illness alone reached 138. In Indonesia, it is estimated that five thousand people were missing following the 7.5-magnitude earthquake and tsunami, and at least two thousand died. The serious thing is that experts are warning that such extreme heat waves will not just be an exceptional phenomena this year. The US National Meteorological Society’s annual climate report last year stated that greenhouse gas emissions have reached a record high, and the global CO2 concentrations have risen by more than 45% compared to before industrialization. It was a year when we were awakened to the seriousness of the heat waves caused by climate change. In addition, energy-related issues related to the disaster-level heat waves and record cold spells caused by climate change are expected to continue steadily, so the discussions on “guaranteeing energy basic rights” for basic human life should also continue.
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