For Funeral Service Companies Struggling Due to COVID-19... 50% Reduction in Mutual Aid Fees for One Year

Fair Trade Commission's Measures to Revitalize the Sangjo Industry

[Sejong=Asia Economy Reporter Joo Sang-don] The Fair Trade Commission has decided to reduce the guarantee fees paid to the mutual aid association by prepaid installment transaction operators (funeral service companies) struggling due to the impact of the novel coronavirus infection (COVID-19) by 50% for one year.

The Fair Trade Commission announced the revitalization plan for the funeral service industry containing this content on the 17th.

An official from the Fair Trade Commission explained, "We previously implemented measures to ease the burden of submitting documents such as audit reports," adding, "In addition, by preparing additional support measures, the purpose is to prevent financial insolvency caused by the deterioration of management of funeral service companies and to preemptively protect consumers enrolled in those companies from damage."

Since the spread of COVID-19, funeral service companies have been facing increased financial burdens due to poor new business performance and an increase in consumer cancellations. In fact, based on companies registered with the mutual aid association, the number of new members decreased by about 22% compared to the previous year's average, and cancellations increased by about 6%.

Accordingly, to alleviate the management burden on funeral service companies, the guarantee fees paid by companies registered with the mutual aid association will be reduced by 50% for one year. Guarantee fees are amounts borne by guarantee contractors to the mutual aid association according to the size of advance payments, to cover the funds for consumer damage compensation and the operating costs of the mutual aid association. The Fair Trade Commission expects that with a 50% reduction in guarantee fees, 40 member companies registered with two associations will receive about 3 billion KRW in financial support. Along with this, the Fair Trade Commission plans to request banks to ease the guarantee fees for funeral service companies that have signed payment guarantee contracts with banks for a certain period.

The investigation burden will also be reduced. The Fair Trade Commission conducts large-scale ex officio investigations every year in the first and second half of the year to investigate violations of the Installment Transactions Act by funeral service companies. However, this year, considering the expected difficulties in normal business activities due to COVID-19, instead of the annual on-site investigation, a written status check will be conducted.

Inspections on unregistered funeral service companies will be strengthened. Recently, consumer damage cases caused by false and exaggerated advertisements by some funeral service companies operating without formal registration under the Installment Transactions Act have been confirmed, and the Fair Trade Commission plans to focus on inspecting the advertising activities of those companies. Existing funeral service companies have requested the Fair Trade Commission to correct this, stating that financial burdens are increasing due to customer loss caused by the irregular operations of unregistered companies.

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