Installation fees must be borne by the provider even if the water purifier contract is terminated early

Fair Trade Commission Corrects Unfair Terms of 7 Rental Service Providers
Rental Late Fees Reduced from Up to 96% Annually to 6%

[Asia Economy Reporter Joo Sang-don] Going forward, not only the initial installation of rental items but also installation costs in cases of early termination due to customer circumstances will be borne by the rental service providers, as the terms have been corrected. Additionally, late fees that previously reached up to 96% annually will be lowered to 6%.

On the 21st, the Fair Trade Commission announced that it reviewed the terms of rental service providers including Kyowon Property, SK Magic, LG Electronics, Cheongho Nice, Coway, Cuckoo Homesys, and Hyundai Rental Care, and corrected 13 types of unfair terms such as clauses on installation and removal cost burdens and excessive late payment penalties.

Until now, SK Magic, Cheongho Nice, Coway, Cuckoo Homesys, and Hyundai Rental Care required customers to bear the costs of installing rental items or imposed installation fees on customers in cases of early termination due to customer circumstances.

According to Article 623 of the Civil Act, the lessor is obligated to deliver the leased item to the lessee and maintain it in a condition necessary for use and enjoyment during the contract period. The standard terms for water purifier rentals stipulate that the provider bears the transportation and installation costs when delivering and installing the water purifier at the customer's requested location. Therefore, clauses that make customers bear installation costs are unfair as they shift costs that should be borne by the provider onto customers and restrict customers' right to terminate the contract, violating the Terms and Conditions Act, the Fair Trade Commission judged.

A Fair Trade Commission official stated, "Delivering rental items to customers is the provider's obligation," and added, "The costs incurred to deliver and install items at the location designated by the customer are expenses that must be paid for business operations and should be borne by the provider."

Accordingly, the Fair Trade Commission corrected the terms of the relevant providers so that installation costs are borne by the providers not only at initial installation but also in cases of early termination due to customer circumstances.

The removal cost clauses were also corrected. SK Magic and Hyundai Rental Care had required customers to bear removal costs when contracts expired or were terminated early due to the provider's fault. The Fair Trade Commission viewed that, just as delivering rental items to customers is the provider's obligation, collecting items after the rental period ends is also the provider's duty. Therefore, it is reasonable for the provider to bear the costs incurred when returning items. The terms were corrected so that providers bear removal costs when contracts expire or are terminated early due to the provider's fault.

Late fee clauses exceeding the statutory interest rate were also changed. Kyowon Property, SK Magic, LG Electronics, Cheongho Nice, Coway, and Cuckoo Homesys had imposed late payment penalties ranging from 15% to 96% annually on customers who failed to pay monthly rental fees by the due date.

However, Article 54 of the Commercial Act (Statutory Interest Rate for Commercial Transactions) sets the statutory interest rate for debts arising from commercial transactions at 6% annually, and Article 379 of the Civil Act sets the interest rate for interest-bearing claims at 5% annually unless otherwise stipulated by law or agreement. Rental providers had been unfairly imposing excessive late payment penalties. Accordingly, providers have corrected the late payment penalties on overdue monthly rental fees to the statutory commercial interest rate of 6% annually.

Additionally, Cheongho Nice and Cuckoo Homesys have corrected their terms to refund registration fees in cases where contracts are terminated due to the provider's fault.

A Fair Trade Commission official said, "Correcting unfair terms in the rapidly growing rental service sector will protect users' rights and serve as an opportunity for the healthy growth and development of the market," and added, "The Fair Trade Commission will continue to monitor unfair terms in the evolving rental service market and strive to enhance consumer rights in related fields."

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