Cruise Travel Packages Also Included in Prepaid Installment Transactions... Advance Payments Must Be Secured

Fair Trade Commission, Legislative Notice of the Enforcement Decree Amendment of the 'Installment Transactions Act'

[Asia Economy Reporter Joo Sang-don] In the future, cruise travel products sold by some funeral service companies will also be subject to the obligation to preserve advance payments. This is intended to reduce cases of consumer damage where consumers do not receive any refund of payments when the seller goes out of business or becomes insolvent.

On the 14th, the Fair Trade Commission announced that it has prepared an amendment to the enforcement decree of the 'Installment Transactions Act' containing these details and will give legislative notice until August 23.

Currently, some funeral service companies (including subsidiaries) sell cruise travel products and family ceremonial products together, but under current regulations, only funeral or wedding products are subject to the obligation to preserve advance payments. Because of this, there is a risk that consumers of these products may suffer damages such as not receiving any refund of payments when the seller goes out of business or becomes insolvent.

Accordingly, travel products and family ceremonial products have been added to the goods subject to prepaid installment contracts, and the relevant businesses are required to register as prepaid installment transaction businesses within one year after the amendment.

However, to prevent confusion caused by the enforcement of the amended regulations, the application target is limited to contracts newly concluded after the amendment, and a grace period is provided by gradually increasing the advance payment preservation ratio by 10 percentage points annually. A Fair Trade Commission official explained, "From one year after the law is enforced, 10% of the advance payment will be preserved, and this ratio will be increased by 10 percentage points annually until it reaches 50%."

The maximum limit on installment fees will also be lowered. The Installment Transactions Act stipulates that the maximum annual rate of installment fees should be set by the enforcement decree within the maximum interest rate range set by the Interest Limitation Act. Recently, as the enforcement decree of the Interest Limitation Act was amended to lower the maximum interest rate to 20% per year, the maximum limit on installment fees will also be lowered from 25% to 20% per year.

The Fair Trade Commission expects that once the enforcement decree is amended, travel and family ceremonial products sold through prepaid installment transactions will be subject to registration, advance payment deposit, and other regulations, thereby broadly protecting the rights and interests of consumers who subscribe to these products. It also expects that lowering the maximum limit on installment fees will prevent the application of excessive installment fees to consumers.

During the legislative notice period, the Fair Trade Commission will collect opinions from stakeholders and related organizations, and after regulatory review, legal review, and legislative procedures such as vice ministerial and cabinet meetings, it plans to promulgate the amended enforcement decree within the year.

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