#701, Seoul YWCA, 1-1, Myeongdong 1-ga, Jung-gu, Seoul  (Postal code: 100-021)

Report Data

Provision Date:	June 23, 2010
Person in Charge:	Secretary-General Choi Su-gyeong
	Head of Team Jo Jun-ha
Tel:	02-774-4050

An increase of "free" mobile phone marketing by mobile phone telecom companies and stores

- Cautions for consumers -

After inducing consumers to sign a contract with a "Free Phone" marketing scheme, some salespeople charge the price of the phone. Please notify consumers of these cases.

The Korea National Council of Consumer Organizations (Chairperson Kim Jae-ok) analyzed counseling received through the Consumer Counseling Center (Tel: 1372) between January and May of 2010, and we discovered that there were 472 cases of counseling related to the charge of mobile phones after inducing consumers into signing a mobile phone contract with a "Free Phone" marketing scheme.

With the fever of Smart Phones, marketing competition of telecom companies and manufactures is getting fierce. As the inventory of old model mobile phones is increasing, cell phone dealers advertise “Free Phone,” but they actually charge mobile phone installments or coerce consumers to join in an expensive fee system. We are receiving related counseling cases.

The most frequent cell phone-related consumer complaint counseling was: By taking advantage of the fact that consumers do not use cash or a credit card at the time of signing a contract, salespeople entice consumers by telling them they give away free cell phones, and then they charge cell phone installments on cell phone bills. Other related cases were: First, sales people induce consumers with free cell phones, then they put consumers in an expensive telephone billing system without notifying consumers or put consumers in a billing system which is quite different from what they told consumers.

In addition to signing a contract with a “Free Phone," sales people did not explain in detail about the contract period or the cancellation charges, so when consumers cancelled a contract without knowing the details of their contract, they were charged for cancellation fees. There were 104 such counseling cases.

Accordingly, the Korea National Council of Consumer Organizations decided to strengthen the monitoring related to the marketing of “Free Phone,” and plan to file complaints to each mobile phone service provider.

On one hand, consumers need to read the details of a contract regarding the fee contract, the contract period, and the mobile phone cost before signing the contract, and after signing the contract, consumers need to check with the customer service center of the main office of each mobile phone service provider in order to prevent an unfair contract.

When a contract was finalized differently from what a sales person told a consumer, the concerned dealer or mobile phone service provider should stop billing immediately. When a dispute occurs in such a case, consumers should call the consumer counseling center (Tel: 1372) to get help.

Appendix: Statistics of counseling regarding “free” mobile phone marketing

June 23, 2010

Korea National Council of Consumer Organizations

Group Members

Green Consumers Network, Korea Federation of Housewives Clubs, Citizens Alliance for Consumer Protection of Korea, National Council of Housewives Classes, Korea Women's Association, Korea Consumer Affairs Institute, Korea Consumer Education Center, Consumers Union of Korea, National Council of YMCAs of Korea, YWCA of Korea

[Appendix: Statistics of counseling regarding “free” mobile phone marketing]

◆ Cases regarding charging the cost of the phone after signing a contract for a “Free Phone”

Month	Jan	Feb	Mar	Apr	May	Total
No. of Cases	75	79	125	96	97	472

◆ Cases regarding excessive fee charges for “Free Phone”

Month	Jan	Feb	Mar	Apr	May	Total
Being assigned to an expensive fee system without notifying consumers	6	12	6	12	6	42
Being assigned to a fee system different from the conditions on the contract	2	8	7	5	7	29

◆ Dispute cases regarding cancellation fees for a “Free Phone”

Month	Jan	Feb	Mar	Apr	May	Total
No. of Cases	17	21	23	21	22	104