Fair Trade Commission: "Waiver or Adjustment of Cancellation Fees for Travel Due to COVID-19 Is Reasonable"

On the 4th, a notice regarding the cancellation of the flight to Mumbai, India, was displayed at Terminal 2 of Incheon International Airport. Photo by Mun Ho-nam munonam@

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission (FTC) announced on the 10th that it is reasonable to exempt or adjust penalties for cancellations of travel due to the novel coronavirus infection (COVID-19). Regarding the imposition of cancellation fees based on private contracts, the government finds it difficult to enforce, so it urged the relevant industries to actively engage in dispute resolution efforts instead.

On the morning of the same day, the FTC held a briefing at the Government Complex Sejong on the "Response Status to COVID-19 Penalty Disputes." At the briefing, Song Sang-min, Director of the Consumer Policy Bureau of the FTC, said, "Recently, consultations regarding penalties in areas such as travel and weddings have surged due to COVID-19," and added, "We requested the travel and wedding industries to make every effort to resolve disputes within the scope allowed by their business conditions, fully considering the position of consumers who had no choice but to cancel their reservations."

According to the FTC, from January 20, when COVID-19 first occurred, to the 8th of this month, the number of consumer consultations related to penalties received by the "1372 Consumer Counseling Center" totaled 14,988 cases (across five industries), which is 7.8 times higher than the same period last year. During the same period, the Korea Consumer Agency received a total of 614 damage relief applications related to penalties due to COVID-19. Specifically, there were ▲228 cases for overseas travel ▲126 cases for air passengers ▲128 cases for food services ▲122 cases for accommodation facilities (domestic + overseas) ▲10 cases for wedding services. Of the total 614 cases, 231 cases (37.6%) were completed, 34 cases (5.5%) were transferred to dispute mediation procedures, and the remaining 349 cases (56.8%) are still being processed.

Earlier, the FTC held two meetings with the Korea Association of Travel Agents on the 7th and 27th of last month. It also held a meeting with airlines on the 13th of the same month, with the Korea Wedding Industry Central Association on the 4th, and with six consumer organizations on the 20th of last month.

At these meetings, the FTC conveyed the opinion that in the travel industry, due to the recent surge in confirmed COVID-19 cases, an increasing number of countries are imposing entry bans and quarantine measures on Koreans, and if these measures make it impossible to achieve the purpose of travel, it is reasonable to exempt or adjust penalties. To the wedding industry, the FTC requested active consultation if consumers request adjustments to penalties or minimum guaranteed numbers, given the heightened concerns about infectious diseases following the surge in confirmed cases and the escalation of COVID-19 to a serious stage since the 19th of last month.

In response, the Travel Association stated that "cancellations of travel to countries with entry bans and mandatory quarantine should be refunded without penalties," but also noted that "specialized products such as honeymoons vary depending on whether local travel agencies and hotels (resorts) impose penalties, so refunds to consumers can only be made after the travel agency receives refunds from local travel agencies and hotels (resorts)." Director Song explained, "In the case of entry bans, there is a possibility that it can be regarded as a government order, and mandatory quarantine can be seen as making the purpose of travel practically unachievable," adding, "There is a certain consensus on the position that cancellations of travel falling under these cases can be exempted from penalties."

The Wedding Industry Central Association has notified its members that if consumers wish to postpone weddings scheduled for March to April, they can do so without penalties for up to three months by submitting a performance confirmation letter. However, regarding cancellations, while encouraging members to reduce penalties, they maintain that full exemption of penalties is difficult considering fixed costs.

Director Song stated, "The issue of penalties should primarily be resolved based on private contracts between the parties involved, and considering the difficulties faced not only by consumers but also by businesses, it is difficult for the FTC to uniformly enforce whether to exempt penalties and to what extent according to fixed standards," and urged, "It is most necessary for contracting parties to voluntarily make efforts to overcome the national crisis caused by the COVID-19 situation."

The FTC plans to consider establishing dispute resolution standards for infectious diseases similar to the current COVID-19 situation in the future. Director Song said, "Revising standard terms and conditions or reflecting infectious disease-related matters in dispute resolution standards requires extensive prior review of many issues," but added, "However, as a long-term task, we plan to review this in preparation for the recurrence of such situations."

This content was produced with the assistance of AI translation services.