Korea National Council of Consumer Organizations

As the year 2019 nears its end, the TOP 10 Consumer News of 2019 has been chosen by the 11 member organizations of the Korean National Council of Consumer Organizations (KNCCO). In 2019, there were many incidents that caused attention to be paid to consumer health and dietary safety, both domestically and globally. These included food safety threatened by radioactive water from the Fukushima Nuclear Disaster, fine dust air pollution and the global outbreak of African swine fever.

Meanwhile, the Invossa Crisis and the LG dryer feud remained ongoing concerns, while the social demand for enacting the bill of the “Financial Consumer Protection Act” rose, after remaining pending for 10 years since the banks were accused of selling high-risk derivative-linked funds (DLFs) without fully explaining the potential risks relating to these products.

As Korean consumers have been involved in, and have suffered from, a variety of incidents in recent years, KNCCO has called for three drafts laws to be tabled in August, for the purpose of protecting and promoting consumer rights, i.e. class action lawsuits, punitive damages, and funds for the promotion of consumer rights. We will employ our best effort to enact these laws during this session of the National Assembly.

Regarding the issues that may affect consumers next year, we will continue to play a role in revealing and defending consumer rights in various sectors. By ensuring that consumers are not harmed by unfair transactions, we will take the lead in building a desirable economic society where consumers can trust companies and where companies serve consumers.

Here’s a look at the Top 10 Consumer News in 2019 as selected by KNCCO.

1) Demand for Class Action Lawsuits, Punitive Damages, and Funds for the Promotion of Consumer Rights

Korean consumers have been involved in, and have suffered from a variety of incidents that have threatened public health and safety in recent years, such as the Volkswagen emissions scandal and the humidifier sterilizer scandal, which caused the loss of 1,400 of lives and disrupted the health of hundreds of thousands more. Nonetheless, nothing has been improved yet. There is no legal system that allows a large group of people to be covered by one claim filed on their joint behalf. In 2019, the KNCCO activities included assisting lawmakers by proposing the bill for consumer rights, as well as holding rallies in front of the National Assembly, and showing our demand for the legislation of three draft laws to be tabled, i.e. class action lawsuits, punitive damages, and funds for the promotion of consumer rights, during the 2019 Consumer Movement in August. In 2020, KNCCO will employ its best effort to enact the related laws during this session of the National Assembly, for interest of consumers. We hope that our work will contribute to the further promotion of the rights of consumers.

2) Fukushima Nuclear Disaster still Threatening Food Safety

In April 2019, the government maintained the ban on imports of Japanese fishery products from Fukushima and seven other prefectures – Ibaraki, Gunma, Miyagi, Aomori, Iwate, Tochigi, and Chiba – as the World Trade Organization (WTO) ruled in favor of Korea. However, this ban is not enough to ensure food safety against the contaminated water that has leaked since the March 2011 disasters. Tons of highly radioactive water is newly present as groundwater and rainwater keeps flowing through the cracks into the ruined power plant. But Japan still wants to dump the allegedly “safe” water, from which radionuclides have been partially removed by treatment. When Typhoon Hagibis hit Fukushima, thousands of bags filled with contaminated waste were swept away by the heavy rains and the radiation level rapidly increased to 25 times higher than the pre-typhoon level, which may have been suspiciously and “intentionally” leaked into the sea. Anxiety is rising ahead of the 2020 Tokyo Olympics, while 2,000-times the normal level of radioactivity was found in a specific region.

3) Nothing has been Resolved in the LG Dryer Feud

After analyzing the complaints received at the 1372 Consumer Counseling Center in October, it was determined that the claims concerning clothes driers have increased by 1735.5% compared to the same month last year, mainly relating to a condenser auto-clean function fault and a bad odor from the dried clothing. The online petition to call for a bona fide solution for the LG Electronics dryer that has been accused of deceiving consumers was posted on the National Petition to Blue House, which more than 3,000 people signed in 24 hours, showing that the problem was still outstanding. The complaints about rusty components and false/excessive advertising kept being reported even after LG Electronics offered a 10-year warranty service, while the Korea Consumer Agency (KCA) recommended that LG should repair all 1.45M units of LG’s TROMM Dual Inverter Heat Pump dryers without charge in August. On November 20th, a class action settlement was made as the KCA decided that LG should pay KRW 100,000 in compensation to each customer who had purchased, and suffered as a result of the problematic dryer. If LG accepts this plan, the absent parties will also be covered; but otherwise ,the only option left will be to resort to individual civil suits. It remains to be seen if either party will refuse the suggestion from the KCA.

4) Global Outbreak of African Swine Fever (ASF) in 2019

South Korea was one of the countries to be affected by the deadly African swine fever (ASF), which is becoming a nightmare for pig farmers. ASF was first confirmed in domestic pigs located in Paju, Gyeonggido on September 16, followed by the slaughtering all pigs located in 4 prefectures including Gyeonggido and Incheon to curb the speared of the disease. Meanwhile a tributary of the Imjin River was contaminated by blood flowing from the slaughtered pigs stored in a military base due to a delay in the arrangements for large containers to be deployed for the carcass disposal in Yeoncheon. Only a few additional confirmed ASF cases have been reported since October, but a number of ASF-positive wild boar have continued to be found until early December in Cheolwon, much to the dismay of the quarantine authorities. Korea has culled more than 417,000 possibly infected pigs in 4 prefectures, while the average wholesale price of pork rose has risen and fallen, before finally plunging, leading to a pork campaign to support the pig farmers decimated by ASF. In 2019, ASF had both direct and indirect effects on the global markets and economies to amplify the risks; for example, the price of pork in China was observed to soar by more than 100%.

5) We need Actual Measures to Protect Us from Record Levels of Fine Dust

The National Council on Climate and Air Quality (NCCA), a newly established presidential committee that was launched in April to tackle the problem of fine dust air pollution, relayed its plans that will focus on a “seasonal management system” amid growing concerns over the demand for a bolder policy action. These plans are based on 5 months of deliberation with members of the public, experts and academics, including policy discussions and an expert review in October. The plans will aim to reduce Korea’s fine dust level by at least 20 percent (23,000 tons) from December to March compared to the same period last year, which is called “Season of High Concentration Fine Dust”, while stressing that special attention would be required in this area, with 21 short-term tasks over 7 sectors including industry, power generation and transportation. However, the plans are merely stopgap measures that do not solve the root causes of the hazardous fine dust, since no core policy is included, i.e. suspending or scaling down the operations at coal power plants (which are often accused of being the biggest sources of air pollution), enhancing public-private inspection teams to avoid the recurrence of emission data falsification, adjusting diesel taxes in the transportation sector, reorganizing oil subsidies and enforcing the mandatory sales of green vehicles. Although China is often blamed for Korea’s current toxic air quality, there is still controversy regarding whether the pollutants originate in China, Korea, or elsewhere; therefore, diplomatic negotiations are required for establishing renewable energy conventions, as well as signing bilateral partnerships and technical cooperation agreements with our neighboring countries.

6) Korea’s Civil Boycott of Japanese Products in Response to Abe’s Trade Restrictions

In the summer of 2019, a new wave of boycotts started in South Korea as a response to the Korea-Japan trade dispute. On July 4^th, Japan decided to strike South Korea off its white lite of trusted trade partners and apply export restrictions on some items, including semiconductor raw materials. The response of Koreans to the Japanese government’s decision was to voluntarily boycott Japanese products and services in South Korea, as well as the anti-Japan movement which has lasted a year. Although those export restrictions are undoubtedly an economic retaliation against the Supreme Court decision regarding the compensation of World War II victims by Japanese companies, the Japanese government has denied and has instead criticized the South Korean government’s decision on the termination of the GSOMIA (a military information-sharing pact), causing trade friction and widespread anger among South Koreans. The Korean economy has been slowing down due to the global economy that has been exhibiting low-growth and a recession, but it is believed that the anti-Japan movements will be prolonged by Korean protesters who are angry with Abe and his cabinet ignoring the principles of fair trade.

7) World’s First Nationwide 5G Mobile Network is Overshadowed

Korea rolled out the world’s first nationwide 5G mobile network in April and is leading the global race to deploy 5G, but the 5G service plans are not cheap. It is clear that they will cost more than the existing 4G (LTE) plans. The cheapest 5G plan is being sold for around KRW 50,000 per month, while 4G is available for around KRW 30,000; thus, new 5G subscribers have no other choice but pay an extra charge of KRW 20,000 to 40,000 monthly per person. This means the communication expenses will increase by KRW 80,000 to 160,000 for a four-person household. The average operating profit margin for the three mobile carriers in the last three years has been 8%, or about KRW 3 trillion, so they will have to make additional efforts to reduce the burden on subscribers. Many local consumers have also complained that 5G services are ‘not-better-but-more-expensive’ then the existing 4G services. The government and service providers should admit that 5G services are not being designed for the consumers, before mitigating the burden of the communication expenses and providing a variety of different options for 5G services.

8) We Urge Immediate Justice for the Invossa Incident

In May, one of the main ingredients contained in Invossa-K Inj. (“Invossa”), which is an osteoarthritis gene therapy drug developed and sold by Kolon Life Science Inc. (“Kolon”), was identified as being derived from kidney cells instead of the cartilage cells that were reported for approval, while tumors may result from the kidney cells. This was followed by Kolon’s allegation that they had not realized that the drug ingredients had been changed before the approval. The Ministry of Food and Drug Safety filed a criminal suit against Kolon, but the Seoul court refused to grant an arrest warrant, as sought by prosecutors, for the Head of the Clinical Development Team at Kolon in November. This was because the judge decided that Invossa itself had a sufficient record of safety and efficacy, even though it was Kolon’s fault they were not aware of the exact substances involved. Invossa was eventually revoked in July over the mislabeling and false reporting of its ingredients. On November 11^th, the Korea Food & Drug Administration (KFDA) announced that the Central Pharmaceutical Affairs Council would be reorganized to enhance its fairness and transparency; however, nobody knows what will happen to the thousands of civilians who have been injected with Invossa in the belief that it was a safe approved and licensed drug, while no compensation for damages was provided. A fair investigation and severe punishment against those in charge is urgently required, as well as immediate remedies for the potential damages caused by Invossa.

9) Mis-selling of DLF Options: Legislation on Financial Consumer Protection shall be Approved

The banks, which are believed by most citizens to be our most trustworthy institutions, have been accused of selling high-risk derivative-linked funds (DLFs) to mostly elderly and novice investors, without fully explaining the potential risks of these products. This has caused the purchasers massive losses, and social demand has increased for enacting the bill of the “Financial Consumer Protection Act” that has been pending for 10 years now. An inspection revealed that the banks sold private investors DLF options worth a total KRW 654.4 billion, or 90 percent of the total amount sold, and that a significant percentage of the options were sold to people in their 60s and above – those in their 60s and 70s accounted for almost 70 percent of the purchasers, while 2 out of every 10 investors did not even understand what a DLF was. The banks have engaged in mis-selling practices even after the financial crisis of 2007-2008, so that consumers have suffered from losses in their investments in equity-linked securities (ELSs). The banks even encouraged their sales staff members, including unqualified staff, to sell the DLFs in order to achieve unreasonable targets due to the economy slowdown, the drop in interest rates, and a decrease in the loan-deposit margins. Our demand is that the government and authorities address our need for prevention measures and remedies for the damages caused by willful acts of misconduct by the financial services enterprises, as a solution for the moral hazards in finance and the lack of safety devices for private investors – we hope the legislation will pass in order to provide a minimum safety net.

10) Decisions on a Taxi Fare System and Tada without Referring to Consumer Opinions