Creating 'Large-scale Infectious Disease Penalty Dispute Standards' Triggered by COVID-19

'Fair Economy System Improvement Plan to Support Overcoming COVID-19'

28 Tasks in 4 Areas Including Small Business Owners, SMEs, Consumers, and Special Employment Types to be Promoted

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[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission has decided to establish standards for resolving penalty disputes in the event of large-scale infectious disease outbreaks such as COVID-19 by the first quarter of next year. These standards will include consumer exemption regulations for penalties similar to natural disasters or force majeure events, as well as penalty reduction criteria based on the extent of the spread. However, retroactive application to contracts already concluded will not be possible.

On the 15th, the ruling Democratic Party, the Fair Trade Commission, the Ministry of Economy and Finance, the Ministry of Employment and Labor, the Ministry of Land, Infrastructure and Transport, the Ministry of SMEs and Startups, and the Financial Services Commission held an Euljiro Livelihood Issues Meeting at the National Assembly Members' Office Building and announced the 'Fair Economy System Improvement Plan to Support Overcoming COVID-19' containing these details.

At the meeting, Fair Trade Commission Chairman Cho Sung-wook said, "Economic vulnerable groups who form the foundation of people's livelihoods such as small business owners, self-employed, workers, and consumers are suffering greater pain due to COVID-19," adding, "Although everyone is facing a difficult economic crisis, policies supporting these economically vulnerable groups to overcome COVID-19 are urgently needed."

This fair economy system improvement plan consists of 28 tasks aimed at protecting and supporting small business owners, self-employed, SMEs, consumers, and workers.

First, the Fair Trade Commission plans to include standards for resolving penalty disputes arising from large-scale infectious disease outbreaks in the consumer dispute resolution standards by the first quarter of next year. Currently, the consumer dispute resolution standards require full refund of deposits to consumers when cancellations occur due to force majeure reasons such as natural disasters in domestic and international travel and domestic accommodation. However, there are no standards for resolving disputes related to large-scale infectious diseases, leading to a surge in penalty-related disputes between businesses and consumers after the outbreak of COVID-19. According to the Korea Consumer Agency, from January 20, when the first domestic COVID-19 case was confirmed, to April 1, consultations related to overseas travel and weddings totaled 19,177 cases, a 6.7-fold (572.6%) increase compared to 2,851 cases during the same period last year.

A Fair Trade Commission official explained, "The purpose is to create reasonable standards to reduce disputes between businesses and consumers and increase predictability for stakeholders in preparation for future large-scale infectious disease outbreaks," adding, "Since both consumers and businesses suffer during infectious disease outbreaks, we will fully gather opinions from consumers, businesses, and legal experts regarding appropriate cost-sharing in such exceptional situations."

The Fair Trade Commission plans to establish both exemption and reduction regulations as infectious disease dispute resolution standards. For overseas travel, if entry to the destination country is difficult due to the spread of the infectious disease, penalties will be exempted, and penalty reduction criteria will be presented based on the extent of the spread. However, retroactive application to rights and obligations confirmed by already concluded contracts is not possible, so even if related dispute resolution standards are established next year, they will not apply to disputes arising from the current COVID-19 situation.

The Fair Trade Commission will also work to reduce the penalty fees in the marriage brokerage industry, which are about twice as high as other industries at around 10% of the penalty amount, to an appropriate level. For the goods rental service industry, it will adjust penalties consumers pay if they move to an area where the service is unavailable during the contract period. Additionally, standard contracts will be subdivided to sufficiently reflect the characteristics of each industry, such as specifying the food service industry into chicken, pizza, coffee, etc. In the subcontracting sector, to activate adjustment of delivery payments, the target will be expanded from 'mid-sized and large companies with sales of 300 billion KRW or more' to all mid-sized companies. The penalty reduction rate for subcontracting law violators who voluntarily correct their violations will be increased from 20% to 30%.

The Ministry of Employment and Labor will promote the expansion of industrial accident insurance coverage for special employment types. By revising the Enforcement Decree of the Industrial Accident Compensation Insurance Act, five additional occupations including door-to-door salespersons, rental product inspection personnel, visiting teachers, home appliance installation technicians, and freight truck owners will be added to the existing nine occupations such as delivery drivers, insurance planners, and golf caddies. Furthermore, a research project will be conducted to reorganize the current exclusivity criteria considering the characteristics of new employment types such as quick delivery drivers and substitute drivers. Alongside this, a guidebook related to the determination of worker status under the Labor Union Act for special employment types will be published to assist in the establishment and operation of special employment type labor unions, and additional system improvement plans related to the operation and activities of special employment type labor unions will be reviewed.

The Ministry of SMEs and Startups will work to improve the business environment for small business owners and self-employed. Under current law, to be recognized as a 'shopping district,' retail and wholesale stores must account for more than 50%, but areas densely populated with restaurants (classified as service stores), which make up a significant portion of alleyway commercial districts, are not recognized as shopping districts and thus excluded from various supports. Therefore, regardless of industry, areas where a certain number of stores operated by small business owners are densely clustered will be designated as 'alley-type shopping districts' by city, county, or district ordinances. These areas will receive various support benefits such as marketing and consulting support, fostering of specialized markets, and facility improvements, similar to recognized shopping districts.

Financial consumer protection measures will also be strengthened. The Financial Services Commission plans to enact the Enforcement Decree of the Financial Consumer Protection Act and related regulations by March next year to apply six major sales principles?such as verifying customer suitability and appropriateness, compliance with explanation obligations, prohibition of unfair solicitation, unfair business practices, and false or exaggerated advertising?to all financial products as a principle, and to specify related standards.

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