Citibank ordered to give full mileage

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Citibank ordered to give full mileage

In 2004, Citibank Korea attracted customers for its Asiana Club credit card with a tempting supplementary benefit offer. It stated that if customers sign-up through Citibank, the customers could receive air mileage points.

It promised to give two miles for Asiana Airlines for every 1,000 won ($0.93) spent with the credit card. The annual membership fee for the card is 20,000 won.

The benefit however didn’t last long because Citibank changed policy terms for the card and cut back the benefits in June 2007. It said two mileage points will be given for every 1,500 won spent. More than 100 Asiana Club credit card users voiced discontent for the change.

They filed a lawsuit against Citibank, demanding full benefits as promised on the contract.

Citibank said, “We notified users about the change through a letter and it’s not necessary to explain such a change directly to customers.”

The Supreme Court, however, ruled in favor of the 108 credit card users, ending the six-year legal battle. It said that if customers chose to sign up for a credit card because of its supplementary benefits, the company should provide a detailed explanation when there is a change.

The Supreme Court, headed by Judge Kim Yong-deok, said yesterday they confirmed the original verdict in an appeals trial that ruled Citibank Korea should provide full air-mileage points to those Asiana Club MasterCard users.

“The air-mileage policy seems a special and core benefit that Citibank offered in order to attract more customers,” the court said in the ruling. “Though card holders had agreed that there could be changes in supplementary benefits when they applied for the card, the bank had to explain about the change before they implemented the new policy.”

From the case, it is foreseen that it will be difficult to change the terms related with supplementary services for those financial service companies or mobile carriers that currently attract customers with diverse supplementary benefits because more people might file a lawsuit.

“They [companies] should provide a detailed explanation to customers and seek their consent when they change policy terms regarding supplementary benefits rather than sending a notification letter,” said attorney Jang Jin-young.

By Lee Dong-hyun, Kwon Sang-soo []
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