"Q1 Funeral Service Companies Dream Life and Nongchon Sarang Close... No Registration Cancellation or Deletion"

Fair Trade Commission Discloses Major Information Changes for Prepaid Installment Sellers (Sangjo Companies) in Q1
Development of Financial Soundness Evaluation Indicators for Sangjo Companies in First Half of Year... "Encouraging Voluntary Financial Improvement"

Cho Sung-wook, Chairman of the Fair Trade Commission (Photo by Fair Trade Commission)

[Asia Economy Reporter Moon Chaeseok] In the first quarter, two prepaid installment transaction operators (funeral service companies), Dream Life and Nongchon Sarang, were found to have closed down. As a result, the number of funeral service companies registered with the Fair Trade Commission (FTC) stood at 84. There were no companies that had their registration canceled or deleted.

On the 27th, the FTC released data titled "Disclosure of Major Information Changes of Funeral Service Companies in Q1 2020," which included this information. According to the data, as of the first quarter, the number of funeral service companies registered with the FTC was 84, down by two from the previous quarter. The FTC oversees the Installment Transactions Act and manages the closure, registration cancellation, and ex officio deletion of funeral service companies, as well as their capital and consumer damage compensation insurance contracts.

To meet the capital requirements in accordance with the revised Installment Transactions Act, Dream Life and Nongchon Sarang, which underwent mergers and acquisitions last year, closed during the first quarter. Conversely, no new companies were registered.

Both Dream Life and Nongchon Sarang took the path of closure due to improper management of advance payments after aggressively merging. Dream Life absorbed and merged with Yejangwon Life, Woori Sangjo, and PL Tour, but the problem was that PL Tour was an unregistered funeral service company. Due to financial difficulties, they failed to fulfill the obligation to deposit advance payments and could not pay cancellation refunds on time, leading to closure. Nongchon Sarang absorbed and merged with BVIP Sangjo, Hanseong Comprehensive Sangjo, Korea Life, and Daehan Sangjo Development but closed due to failure to fulfill the obligation to secure advance payments.

Two companies, Kyowon Life and With Life Group, increased their capital. Eight companies changed their representatives or addresses.

The FTC urged consumers to be especially cautious as there have been recent cases of funeral service companies illegally withdrawing advance payments. Consumers must regularly check the operational status of funeral service companies and whether advance payments are secured. The FTC also guided that the operational status, advance payment deposit details, and advance payment security status of funeral service companies can be checked on the "Naesangjo Chajwo" website.

Additionally, when a funeral service company closes (including registration cancellation or deletion), the advance payment security institution sends a notice of closure and consumer damage compensation application to the consumer's address or contact information. Therefore, consumers must inform the funeral service company if their address or contact information changes. Consumers of closed funeral service companies (including those with canceled or deleted registrations) can receive 50% of the amount they paid as damage compensation or use the "Naesangjo Geudaero" service, which provides funeral service products similar to their existing subscription.

Hong Jeongseok, head of the FTC's Installment Transactions Division, stated, "To prevent additional damage to consumers caused by funeral service companies that aggressively pursued mergers to meet capital requirements, the FTC plans to continuously monitor small companies that recently underwent mergers or capital increases to check for any legal violations during the merger and capital increase process."

The FTC plans to develop financial soundness evaluation indicators for funeral service companies in the first half of the year and disclose the evaluation results. To this end, it will review and supplement the results of accounting indicator research projects. The FTC believes that establishing a proper financial statement evaluation system for funeral service companies will not only help consumers make rational choices but also encourage companies to voluntarily improve their financial soundness.

Funeral service companies that did not submit audit reports by the deadline of the 31st of last month will be fined. However, companies that submitted audit reports late due to unavoidable reasons such as the impact of COVID-19 will be exempt from fines.

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