As Mergepoint buries books, FSS reports it to the police
The Financial Supervisory Service (FSS) reported Mergeplus to the Seoul Metropolitan Police Agency after the company repeatedly refused to deliver its books to the regulator.
“We will first carry out an investigation to see whether the company has violated any laws,” the police said.
Mergeplus, which deals in digital coupons, announced earlier this month that it will register as an electronic financial business by the end of August, but it has not filed the documents with the FSS.
“We have been very patient and repeatedly told the company that files to guarantee the company’s transparency need to be handed in for official registration,” an official from the FSS said. “The company has not responded, and we have decided to report it to the police to protect the rights of consumers.”
Coupons sold on the Mergeplus Mergepoint app can be used to get 20-percent off at a wide range of establishments, but it did not register its business with the financial regulator. The FSS told Mergeplus to register Mergepoint on Aug. 4, after which the app stopped issuing new coupons and reduced the number of stores where the coupons could be used.
On Monday, the FSS held an emergency meeting called by governor Jeong Eun-bo as Mergepoint was swarmed by a mob of angry customers. Mergepoint abruptly changed the terms of its Mergeplus discount coupon service last week due to concerns from regulators that it may be in violation of the rules related to financial businesses.
As customer losses grow, the Bank of Korea on Wednesday urged the National Assembly to pass a revision to the Electronic Financial Transactions Act to prevent another Mergepoint crisis.
A revision to the act was proposed by Rep. Youn Kwan-suk in November last year, but has not been discussed for nine months. The bill would mandate all prepayment services to have their customer funds managed by a separate entity, such as a bank. The business must also regularly check if the prepaid amount and its budget match.
This is already laid out by the FSS guidelines, but they do not have any legal binding power.
The central bank and the Financial Services Commission have been divided over the bill because it includes a clause allowing tech companies to open “comprehensive payment platforms.” This would allow tech companies the license to provide a variety of electronic financial services on a single platform.
For instance, it could allow people to open up a bank account on Kakao Pay or transfer money through Payco.
On Wednesday, the central bank pushed for the bill to be passed for the sake of the consumers.
“The bank is in the opinion that the bill should be discussed without the clauses related to payment licenses,” it said in a statement. “Those clauses are irrelevant to consumer protection. We hope that the National Assembly will swiftly establish a protection system for electronic financial transactions through the bill."
BY YOON SO-YEON [firstname.lastname@example.org]