FTC eases rule on refunds, returns

Last September, in a video clip that went viral on Korean social networking sites, a man was shown wrecking his 200 million won ($177,762) Mercedes-Benz S-Class with a golf club. The 34-year-old owner, surnamed Yoo, erupted in a fit of rage in front of a Benz dealership that refused to exchange his vehicle or grant him a refund although he said his premium car shut off mid-driving three times barely five months after purchase.

Drivers need not follow in Yoo’s footsteps because they will soon be able to receive full refunds or exchange faulty vehicles for new ones. The Fair Trade Commission (FTC) announced Thursday that cars with safety issues like reoccurring abrupt engine shutdowns are eligible for exchanges and refunds.

“We have decided to revise the standard, because although cars are high-priced products, they have much too strict exchange and refund intricacies, leaving consumers at a disadvantage,” said Lee Yoo-tae, the commission’s head of consumer policies.

Previously, exchanges and refunds for automobiles were possible only if safety issues occurred at least four times. Three engine shutdowns weren’t enough for a refund; there had to be a fourth breakdown. With the policy revision, three failures on the same automobile part within a year of purchase will make the car eligible for a refund or exchange.

The revision is extended to even more minor problems such as unsynchronized lighting on the dashboard and oil leaks, if they recur four times. The commission said that although minor problems might not be life-threatening, they eventually devalue the car and might develop into more serious problems. Also, if a car had to be kept in the maintenance center for more than 30 days within a year of purchase, it will be eligible for a refund and exchange regardless of the gravity of the problem.

The FTC also laid out revisions for other areas of business. Guests now can request a full contract fee refund from accommodations that post false or exaggerated advertisements, like rooms that are different from photos on reservation sites, or bungalows “five minutes from the beach” that actually are far from the sea, or hotel rooms with a “great view” that offer a wide expanse of red brick wall in front of the window. These refunds cannot be requested after the stay, however.

As for mobile phone gift certificates, popularly dubbed “gifticons” in Korea, corporations can no longer decide refunds, because if a revision is implemented, full refunds will have to be given if purchase is cancelled within a week of transaction. Also, consumers who have used 60 percent of the value of a gift certificate priced over 10,000 won can request a refund for the remaining value. Vouchers priced for less than 10,000 won need to be used up to 80 percent for such refund. The revision also applies to internet vouchers and electronic cards.

Although these consumer dispute resolution criteria aren’t legally binding, the Korea Consumer Agency, which mediates disputes between producers and consumers, uses them to make decisions. The court also refers to these criteria in case the disputes develop into lawsuits.

These new standards will go into effect in late October.

BY CHO HYUN-SOOK [lee.dongeun@joongang.co.kr]