K-Pop’s Big 4 Agencies Fined Over 10 Million Won For Violating Consumer Rights
According to reports, the Korea Fair Trade Commission has sanctioned the online stores of the biggest four K-Pop companies, HYBE, SM Entertainment (SME), JYP Entertainment (JYPE), and YG Entertainment (YGE), for violating consumer rights.
On August 11, the Fair Trade Commission (FTC) imposed corrective orders and a fine of ₩10.5 million KRW (about $7,690 USD) on the online idol merchandise sales companies of the four labels above, namely, Weverse Company (HYBE), YG Plus (YGE), SM Brand Marketing (SME), and JYP Three Sixty (JYPE). All four companies were found to have violated the Electronic Commerce Act by setting arbitrary refund periods shorter than the legally mandated one and imposing stringent conditions for refunds on merchandise related to idols (such as albums and official goodies). In addition, the companies failed to provide specific information about the product’s delivery, which the FTC deemed as a violation as well.
The current Electronic Commerce Act stipulates that if a product is defective, customers can claim a refund within three months of receiving it. But SME and JYPE’s policies directly violated these rights by requiring customers to submit claims for defective or incorrect items within seven days of delivery. SM’s policy also states that any product being returned due to a simple change of mind must arrive at their logistics center within seven business days of the original delivery date, contrary to the legal provisions which state that all consumers are entitled to issue a refund request within seven days from the date they receive the items.
HYBE, JYPE, and SME also stated that after a certain period (one month from shipping for HYBE and 30 days for the latter two), they would not offer any compensation for the lost items, even though the law allows claims within three months of receipt. The Electronic Commerce Act also states that even if a product’s packaging is damaged while unboxing, the consumer still has the right to ask for a refund. However, HYBE and SME’s policies prevent returns if the packaging is opened or damaged.
SME and JYPE also require customers to provide video evidence of the product’s unboxing to get a refund, which is an illegal policy since the law places the burden of proof on the seller.
YGE, on the other hand, has restrictive policies regarding event-related purchases. For example, in the case of signing event raffles, refunds or cancellations are not allowed after the application period. The law, however, says that customers can cancel before the winners of such events are announced.
Out of the collective ₩10.5 million KRW (about $7,690 USD) fine imposed on all four companies, Weverse was fined ₩3.00 million KRW (about $2,200 USD), while the rest were fined ₩2.50 million KRW (about $1,830 USD) each. In response to FTC’s sanctions, all four companies have corrected their policies and aligned them with the law.
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