- Follow up to the President's Report on 'Measures to Promote Competition in the Financial and Telecommunications Sector'
- Following the banking sector (August), requests for correction of specialized credit finance sectors such as credit cards, leases, and installments -
On October 31, the Fair Trade Commission reviewed a total of 1,376 terms and conditions used by credit-specialized financial companies, determined that 57 of them violated the rights and interests of financial consumers and requested the Financial Services Commission to correct them.
* Review the terms and conditions of 1,376 credit specialized financial companies (781 credit card companies, 137 lease and installment financial companies, 426 dual-employment credit companies, 32 others) in 2022
In February, the Fair Trade Commission established and reported to President Yoon Suk Yeol a plan to promote competition in the financial and telecommunications sectors, and as part of the measures, it will review financial transaction terms and conditions and strictly request corrections for those unfavorable to consumers.
In response, the FTC has been closely reviewing all newly enacted and revised financial transaction terms and conditions by financial institutions such as banks, credit-specialized financial companies, and financial investment companies, and this time, it asked the financial authorities to correct unfair terms and conditions in the banking sector.
[Type of unfair terms and conditions (9 types, 57 clauses in total)]
① Provisions for business operators to voluntarily suspend, restrict, or change additional services (23 provisions)
② Provisions for business operators to voluntarily suspend, restrict, or change main services (10 provisions)
③ Articles that set the reason for termination of the contract abstractly and comprehensively (6 articles)
④ Provisions in which individual notification means are inappropriate or individual notification is omitted (5 provisions)
⑤ Provisions that lose the benefit of the deadline without improper reasons or prior procedures (4 provisions)
⑥ Provisions on the agenda for expressing intention on the omission of customers (4 provisions)
⑦ A clause in which a customer must pay a lease fee even if the leased item is lost (2 provisions)
⑧ Provisions to indemnify business operators in case of loss, leakage, or theft of access media (2 provisions)
⑨ Provisions that allow credit-specialized financial companies to dispose of collateral objects at their discretion (1 provision)
As a representative major type of unfairness, terms and conditions that could hinder customer predictability and cause unexpected damage by arbitrarily changing, interrupting, or restricting service contents were problematic. Among them, additional services of global affiliates (visas, masters, etc.) for credit card overseas payments could be unilaterally suspended or changed without prior notice. This is not directly related to payment functions such as airport lounge use, valet parking agency, and free golf course use, but consumers choose high priced membership services according to the service contents of their affiliates, which can be said to be unfairly disadvantageous to customers.
In addition, major matters such as usage history inquiry in the app and the fact of charging fees for transfers were sometimes guided through the "App Push" of the mobile app, but it was not considered appropriate as a means of guiding whether to charge the app push function to block advertising messages.
In addition, if there is no mobile phone number to guide the replacement of the expired prepaid card and the refund of the balance, the terms and conditions that omit the individual notification procedure and the clause that immediately loses the benefit of the deadline without the maximum procedure were requested.
In particular, if a customer loses the benefit of the deadline, all loan principal and interest must be reimbursed even before maturity, so it is reasonable to give an opportunity to correct it through prior notice, except for extremely exceptional reasons such as seizure order and commencement of compulsory execution.
It is expected that many unfair terms and conditions will be corrected through this correction request to prevent damage caused by unfair terms and conditions of financial transaction customers such as consumers and small and medium-sized companies using specialized credit finance and strengthen the responsibility of business operators.
Following the banking and credit-specialized financial industries, the FTC plans to quickly correct unfair terms and conditions in the financial investment sector to resolve unfair contract practices in the financial sector, while working closely with financial authorities to prevent the financial industry from repeatedly using unfair terms and conditions.