'Fair Trade Commission Fine' Kakao: "Melon Early Termination Adequately Informed"

Kakao was fined by the Fair Trade Commission for not sufficiently informing consumers about the 'early termination' feature while providing music streaming services. Kakao expressed difficulty in accepting such sanctions and hinted at legal action.

On the 21st, Kakao Entertainment issued a statement regarding the Fair Trade Commission's decision, stating, "Customers who wanted early termination rather than general termination on Melon were able to easily perform early termination through the web and customer center, and there is no empirical evidence that anyone was unable to perform early termination and had to resort to general termination due to this case," rebutting the FTC's review results. Kakao Entertainment took over the Melon business division from Kakao in July 2021.

The Fair Trade Commission stated that Kakao treated all termination requests for Melon and other music services as 'general termination' without separately confirming whether it was 'general termination' or 'early termination,' imposing corrective orders and a fine of 98 million KRW for 'consumer deception.' Early termination immediately cancels the contract upon application, ending service use, and refunds the unused portion of the paid service. In contrast, general termination maintains the contract until the end of the usage period, and the paid music service fee is not refunded.

Kakao Entertainment explained, "Even before the FTC investigation, Melon sufficiently provided guidance and notices about early termination through 'web FAQs' and 'precautions before payment,'" adding, "Early termination was supported via the web's early termination button and the customer center."

According to Kakao Entertainment, during the review process of this case, terminology related to termination applications was clearly changed, and the early termination feature was fully implemented across all sales channels by July 2021. To date, all subscription services in Korea except Melon either do not provide early termination or allow it only through customer centers.

Kakao Entertainment stated, "We have completed voluntary correction regarding the points pointed out by the FTC, and it is difficult to understand the sanction decision against the Kakao corporation, which has not conducted the related business for several years. However, we plan to decide on whether to appeal the sanction after receiving the official decision document as the sanctioned party, Kakao," it concluded.

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