Melon 'Jungdohaeji' Feature Hidden by Kakao... Heavy Fine Imposed

Fair Trade Commission imposes corrective order and 98 million KRW fine on Kakao for violating Electronic Commerce Act

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Kakao, which operates the music streaming service Melon, has been sanctioned by the Fair Trade Commission for insufficiently informing users about the 'early termination' feature that allows partial refunds of subscription fees.

On the 21st, the Fair Trade Commission announced that it would impose corrective orders and a fine of 98 million KRW on Kakao for violating the "Act on Consumer Protection in Electronic Commerce, etc." (hereinafter referred to as the Electronic Commerce Act).

According to the Fair Trade Commission, from May 2017 to May 2021, Kakao sold subscription-based services through apps such as Melon and KakaoTalk, and when consumers requested cancellation, it uniformly processed them as 'general termination.'

Contract termination types are divided into early termination and general termination. Early termination immediately ends the contract upon request, and the consumer is refunded the unused portion of the paid music service subscription. In contrast, general termination maintains the contract until the end of the usage period, and the paid music service fee is not refunded.

It was found that Kakao did not sufficiently notify consumers that early termination was possible when selling music services. There was also no procedure to confirm whether the cancellation request was for general termination or early termination.

The Fair Trade Commission determined that Kakao's actions constitute providing false information or using deceptive methods in transactions with consumers under the Electronic Commerce Act and decided to impose sanctions.

Kakao holds a 38.6% market share (as of January 2021) in the music streaming market, making it the leading operator.

The Fair Trade Commission stated, "We will continue to strictly respond to illegal activities to establish a transaction order that meets consumers' expectations."

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