Unfair practices went too farWireless carriers’ schemes to rip off consumers are getting ever more cunning. According to a Financial Supervisory Service finding quoted by People’s Party Rep. Shin Yong-hyeon, the nation’s three wireless carriers charged their clients annual fees for installment plans and earned more than 1 trillion won ($850 million) from 2012 to 2015.
The fees covered the monthly installment plan on handsets and a 2.9 percent premium on payment insurance. The companies are insured against installments for handset payments.
In the past, they collected 20,000 won to 30,000 won for a smartphone worth 1 million won. But now, they bundle everything together as part of a monthly installment plan.
According to Shin, SK Telecom and LG U+ levied 5.9 percent in annual interest payments while KT collected 6.1 percent. The interest rates are above the rates of 1.9 percent to 3.9 percent for three-year installment plans and 4.9 percent to 5.9 percent for six-year plans for auto purchases in Korea.
According to a survey by the Korea Consumer Agency, 42 percent of smartphone users were unaware that they had been paying interest on smartphone installments. Consumers are not told this when they sign up for a plan.
Wireless carriers this year have been warned of unfair pricing several times. The Anti-Corruption and Civil Rights Commission advised them to clarify their pricing systems after finding out that they had been leaving this information out.
They had to reward customers with extra data after they were found to have misled consumers by offering limitless data in their ads.
Despite numerous warnings, wireless carriers continue this practice because supervision and punitive actions are lax.
Smartphones are an everyday item in Korea. Costs for everyday items should be supervised as such. The government must clamp down on the unfair business practices of wireless carriers.
JoongAng Ilbo, June 29, Page 30