The Korea Fair Trade Commission sanctions major K-pop companies for illegal refund practices
The Korea Fair Trade Commission (KFTC) has taken action against several major companies in the K-pop industry. This includes Weverse Company, YG Plus, SM Brand Marketing, and JYP 360. These companies, which handle the online sales of idol merchandise, faced sanctions for illegal refund practices that unfairly targeted consumers, particularly teenagers.
When GFRIEND’s contract was terminated, fans asked for refunds for Buddy Membership, a Weverse product.
Instead of providing refunds in cash, what fans paid, we were refunded with “Weverse cash”
Layers claim this may violate the E-Commerce Act#HybeSpeakUp #하이브_해명해 pic.twitter.com/PPUFdcPuE1
— Sara (@GFRIENDSparkles) June 29, 2021
The KFTC discovered that these companies have been shortening the legally mandated refund period. Under current e-commerce law, customers are entitled to withdraw from a purchase within three months or within 30 days of discovering a defect. However, Weverse Company and others informed customers that even defective products could only be refunded within seven days. Additionally, they imposed unreasonable restrictions, such as requiring video evidence of the unboxing process to qualify for refunds.
This behavior, known in Korea as “gapjil” (abuse of power), effectively shifted the burden of proof onto the consumers, violating e-commerce laws. These practices not only limited customers’ rights but also exploited the loyalty of teenage fans, who are less aware of their legal protections.
In response, the KFTC issued corrective orders and imposed fines totalling 10.5 million KRW (approximately 7,740 USD) on the companies involved. Weverse Company was fined approximately 3 million KRW (2,210 USD), while YG Plus, SM Brand Marketing, and JYP 360 each received fines of 2.5 million KRW (1,840 USD). The fines were reduced as the companies voluntarily corrected their practices following the investigation.
A KFTC representative emphasized protecting teenage consumers in the entertainment industry and stated that the commission would continue to monitor for similar violations. They warned that stricter penalties, including business suspensions, could follow if such practices persist.
