LG U+ last to eliminate contract cancellation fees

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LG U+ last to eliminate contract cancellation fees

LG U+, the nation’s third-largest mobile carrier, will join SK Telecom and KT in ending contract cancellation fees.

Since the Mobile Device Distribution Improvement Act put a ceiling of 300,000 won ($271) on smartphone subsidies, the carriers have looked for other ways to attract subscribers.

“We are discussing with the Ministry of Science, ICT and Future Planning the elimination of cancellation fees,” said LG U+ in a statement. “From Dec. 1, the cancellation fees on contracts will be gone.”

Subscribers who failed to complete their contracts had to pay penalties equal to the total amount of their monthly discounts.

For instance, if a consumer who received a 16,000 won monthly discount for subscribing to a 67,000 won monthly plan on a two-year contract wanted to end the contract after five months, the cancellation penalty would be 80,000 won.

Carriers were blamed for advertising the monthly discounts as part of the smartphone subsidies and failing to explain to consumers that they would have to repay the discounts if they broke their contracts.

Due to growing criticism, KT, the second-largest mobile carrier, introduced a monthly plan that does not require a contract but provides the same monthly discounts offered on two-year agreements.

No. 1 carrier SK Telecom soon followed by dropping the cancellation fee, while maintaining existing monthly plans for two-year contracts. Those who subscribed to SK Telecom since Oct. 1, when the new mobile act was implemented, will not be penalized for canceling contracts starting Dec. 1.

“There were many cases in which consumers were not aware of the monthly discount offered on two-year contracts and panicked when they realized they need to pay back the discounts when ending a contract early,” said a spokesman for KT.

“The three mobile carriers are now expanding the benefits for customers to better meet consumers’ needs in alleviating the burden of cancellation fees since the new mobile act took effect.”

BY KIM JUNG-YOON [kjy@joongang.co.kr]
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