8,781 Mobile Phone-related Complaints Filed during the 1st Half 2004, Up 42.6% over the Corresponding Period of Prior Year
[Analysis of Consumer Complaints Received during the 1 Half of 2004, Korea National Council of Consumer Organizations]
8,781 Mobile Phone-related Complaints Filed during the 1st Half 2004, Up 42.6% over the Corresponding Period of Prior Year
The Korea National Council of Consumer Organizations (President Lee Haeng-ja) announced that the overall consumer complaints received by it during the 1st half of 2004 decreased by 9.09% over the corresponding period of 2003, tallied at 189,634 total cases.This decline is explained by the economic slump during 2003, resulting in low consumption.
1. Breakdown by Product Category
By product category, cultural commodities (consumer electronics, etc) accounted for the largest share of consumer complaints, followed by clothing, transportation and communications-related products, food and beverage, and household supplies, in this order.
Changes in Consumer Complaint Filing by Product Category
1) Complaints on ‘Multi-function Mobile Phones’ for Frequent Breakdowns and High Calling Plan Costs
- Consumers are real losers in the market conquest battle between manufacturers sparked by the introduction of number portability
Among cultural commodities, the product category accounting for the largest share of complaints filed, information and communications device – mobile phone topped the list, drawing 8,781 total complaints, which is 23.14% of total complaints received in this category.
The surge in consumer complaints on mobile phones was caused by multi-function cell phones flooding the market, packed with multiple features such as camera, streamed video playback, mp3 playback and wireless internet, which turned out to be highly unstable and unreliable.In addition to frequent breakdowns, consumers also complained about the high prices of these value-added multimedia services.
Rate schedules used by service providers are most often highly complicated and not easy to understand for general consumers; which is made worse by the fact that these providers failed to provide consumers with sufficient pricing information beforehand.
Since the introduction of number portability on January 1 of this year, mobile carriers are adopting increasingly aggressive marketing strategies, including illegal practices such as cash rebates or advertising tricks making discounts offered with several years of contracts seem as simple discounts.This resulted in many complaints by consumers demanding to cancel subscriptions, whose terms were not properly disclosed to them.
2) Top Complaints on Transportation and Communications Services Are Related to Online Services
- Large numbers of complaints also directed against KTX, launched in April of this year
Transportation and communication service-related complaints accounted for 9.28% of total cases reported, corresponding to 17,602 cases.
Of this amount, internet-related complaints amounted to 43.29% (7,620 cases).They most often concerned user agreements, cancellation of membership and pricing with regard to online gaming sites, high-speed internet and online educational sites.
86 complaints received concerned KTX, the highest-speed rail inaugurated in April of this year, by consumers angered by repeated train delays, especially frequent during first days after the start of service; train scheduling excessively centered on KTX at the expense of existing trains such as Saemaeulho and Mugunghwaho; costly fares; lack of traveler information (ex: information on ticket sales); and poor service.Some consumers also pointed out that KTX is wasting energy by over-air-conditioning their cars.
3) Strings of Food Safety Accidents
Food-related complaints, 8.23% (15,602 cases) of total complaints received, were up by 2.14% over the corresponding period of last year.In the immediate aftermath of the dumpling scandal in June, complaints on prepared food (frozen dumplings, hamburgers, etc.)surged by a hefty 101.64% (182 cases in 2003 -> 367 cases in 2004).
A substantial portion of these complaints were about food poisoning or abdominal pains occurred after consuming hamburgers and other fast food.Many of them were also filed by consumers demanding refunds on the scandal-embroiled frozen dumplings they purchased, or wishing to participate in a class action suit against the manufacturers.
102 cases concerned meat products or associated with the mad cow disease crisis and avian flu.Mostly,concentrated during the earlier part of the year on the heels of the mad cow alert and the outbreak of the avian flu, many of these complaints were about requesting merchandise return on meat bought via home shopping or internet orders.Some complaints were directed against travel agents who angered customers by refusing or not properly processing cancellation requests on trip reservations to the avian flu-affected region, including Vietnam and other Southeast Asian countries.
4) Growing numbers of inquiries on national pension funds
The article entitled ‘The Secrets of National Pension Funds’ which started to circulate on the internet since May of this year succeeded in spreading a paranoid mood among the general public concerning the public pension system.Accordingly, a notable increase was observed in consumer inquiries about national pension funds, rising to 222 cases from 172 in the corresponding period of last year, up29.07%.They range from questions and complaints on beneficiary restrictions such as for survivors’ benefits to those regarding the mandatory nature of the public pension program; protests about the continuously rising contribution rate, burdening household economies more heavily every year; and simple requests for more information.
2. Breakdown by Marketing Channel
By marketing channel, TV home shopping-related complaints sharply increased over the previous year by 110.93% (1,839 cases -> 3,879 cases).Cases related to e-commerce decline by36.66% (8,116 cases -> 5,141 cases), and complaints directed against multi-level marketing also fell by68.59% (1,786 cases ->561 cases).
Some of the reasons explaining why complaints against TV home-shopping stores, in spite of shrinking sales, are on the rise are as follows:
First, inadequate supply of product information, while the ranges of products handled have broadened.Products distributed through home-shopping are today no longer only physical goods, but also non-physical goods such as travel packages and insurance products.While this development requires more complete information disclosure on products, most home-shopping program hosts still devote their time mainly to sales pitches, rather than on key product information.
Second, the level of consumer awareness heightened thanks to the continuous monitoring by consumer organizations.Over the years, the oversight by consumer organizations helped identify many nonconforming products distributed through this marketing channel, and warned consumers against them.The increase in home-shopping-related inquiries may be seen as a positive indication as to the success of consumer initiatives raising the awareness of the general public.
2) Less Inquiries on E-commerce-related Issues thanks to New Safety Mechanisms
Although the volume accounted for by e-commerce in the retail industry has significantly grown, complaints directed against this marketplace has decreased from the same period of last year.The major contributing factor to this decline is the speedy intervention by the government to the problem of mounting frauds and unfair business practices among online stores, by putting a number of safety mechanisms into place.Measures such as making the use of escrow programs and digital certification mandatory produced positive influence.
No less importantly, the quality of goods distributed through online outlets has also substantially improved.The decrease in online shopping-related complaints therefore is in part due to the enhanced level of buyer satisfaction.
3) With the shrinking marketplace for multi-level marketing, related consumer complaints steadily decline
Factors such as the protracted worldwide economic recession and the introduction of the mandatory requirement of product liability insurance (Jan. 1, 2003) have contributed to the shrinking of the multi-level marketing market.Accordingly, inquiries and complaints concerning multi-level marketing also noticeably dropped, down by68.59% from the same period of the previous year.
4) Food from TV home shopping, cell phones from online stores
Food topped the list of products most popularly purchased through TV home shopping (1,422 cases), followed by cosmetics and personal hygiene products including hair care products (971 cases), household supplies including kitchen appliances, utensils, furniture, bedding and linens (524 cases).As for the internet marketplace, the most frequently purchased products were cell phones (1,492 cases), consumer electronics, including video and audio playback devices, CDs and books (1,266 cases) and clothing (1,006 cases).
3. Reasons for Filing and Dispositions Taken
33.41% (62,764 cases) of the total cases filed were information request.Complaints about non-fulfillment of a contract by a business or about quality deficiency of a product accounted for 22.04% (41,801 cases) and 17.65% (34,059 cases), respectively.
By disposition taken by consumer consultants, counseling/information service made up 76.28% (144,651 cases), termination of contract, 6.06% (11,489 cases), and corrective actions performed on unfair business practices, 2.05% (3,881 cases).
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