Fair Trade Commission in Sejong City. [Photo by Yu Dae-gil]
The Fair Trade Commission has identified unfair terms in the membership agreements of entertainment companies and fan platforms operating paid fan club memberships. On June 10, the commission reported that it found 77 instances of unfair clauses across eight categories in the terms of service from 24 companies, including SM Entertainment and Big Hit, as well as Weverse Company and Kakao Entertainment.
Paid fan club memberships allow consumers to pay a fee for benefits such as early access to concert tickets and exclusive communication opportunities with artists. Consumers must purchase these memberships through platforms where the specific artist is available, leading the Fair Trade Commission to investigate potential coercive trading conditions.
The investigation revealed unfair terms in four areas: unreasonable refund restrictions, unjust exemption from obligations and responsibilities, limitations on users' rights, and other unfair clauses. Specifically, while refunds are allowed within seven days of payment, the terms restrict refunds if benefits have been utilized or prohibit refunds and cancellations due to change of mind.
The commission explained that imposing refund restrictions violates Article 6 of the Terms and Conditions Act, which states that customers should not bear excessive liability for damages. Gwak Go-eun, head of the commission's special transaction terms division, stated, "The benefits of paid fan club memberships are tied to the artist's activity schedule, so the benefits available can vary depending on when a person joins. If members are dissatisfied with the benefits provided, they should be able to withdraw and receive a refund."
In response, the companies have agreed to allow full refunds within seven days if there is no usage history. After seven days or if there is usage, they plan to refund the remaining amount after deducting a cancellation fee and the amount used.
Additionally, a clause from SM Entertainment that stated the remaining validity period of a membership would not be restored after canceling a renewal payment was also flagged. The commission deemed this clause to unfairly reduce the company's obligation to restore the contract, violating Article 9 of the Terms and Conditions Act.
Other problematic clauses included one from YG Entertainment that made refunds impossible if a member's withdrawal prevented the provision of content related to changed members, and another from Kakao Entertainment that exempted the company from responsibility for service interruptions.
The Fair Trade Commission believes that consumers who were unable to receive refunds after joining paid fan clubs will benefit from the new refund policies based on elapsed time or usage. It also anticipates that increased accountability among businesses will minimize refund demands through improved service quality.
Gwak warned, "If entertainment companies and platforms fail to comply and rectify these issues, we will proceed with corrective recommendations and orders. If improvements are not made, we will consider filing complaints."
Paid fan club memberships allow consumers to pay a fee for benefits such as early access to concert tickets and exclusive communication opportunities with artists. Consumers must purchase these memberships through platforms where the specific artist is available, leading the Fair Trade Commission to investigate potential coercive trading conditions.
The investigation revealed unfair terms in four areas: unreasonable refund restrictions, unjust exemption from obligations and responsibilities, limitations on users' rights, and other unfair clauses. Specifically, while refunds are allowed within seven days of payment, the terms restrict refunds if benefits have been utilized or prohibit refunds and cancellations due to change of mind.
The commission explained that imposing refund restrictions violates Article 6 of the Terms and Conditions Act, which states that customers should not bear excessive liability for damages. Gwak Go-eun, head of the commission's special transaction terms division, stated, "The benefits of paid fan club memberships are tied to the artist's activity schedule, so the benefits available can vary depending on when a person joins. If members are dissatisfied with the benefits provided, they should be able to withdraw and receive a refund."
In response, the companies have agreed to allow full refunds within seven days if there is no usage history. After seven days or if there is usage, they plan to refund the remaining amount after deducting a cancellation fee and the amount used.
Additionally, a clause from SM Entertainment that stated the remaining validity period of a membership would not be restored after canceling a renewal payment was also flagged. The commission deemed this clause to unfairly reduce the company's obligation to restore the contract, violating Article 9 of the Terms and Conditions Act.
Other problematic clauses included one from YG Entertainment that made refunds impossible if a member's withdrawal prevented the provision of content related to changed members, and another from Kakao Entertainment that exempted the company from responsibility for service interruptions.
The Fair Trade Commission believes that consumers who were unable to receive refunds after joining paid fan clubs will benefit from the new refund policies based on elapsed time or usage. It also anticipates that increased accountability among businesses will minimize refund demands through improved service quality.
Gwak warned, "If entertainment companies and platforms fail to comply and rectify these issues, we will proceed with corrective recommendations and orders. If improvements are not made, we will consider filing complaints."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.