The cap on restaurant no-show penalty fees to prevent "no-shows" will be doubled from the current level. Omakase, fine dining, and large orders such as 100 rolls of kimbap face relatively larger losses from no-shows, so restaurants will be allowed to charge 40% of the total bill as a penalty.
The Fair Trade Commission said on the 22nd that it has prepared a revision to the "Consumer Dispute Resolution Standards" reflecting these details and will preannounce the legislation through Nov. 11. The Consumer Dispute Resolution Standards are government-recommended guidelines for reaching settlement in disputes, and the implementation date has not been set. At the earliest, it would be within the year.
Currently, the no-show penalty deposit for restaurants is set at up to 10% of the total bill, but under the revision it will be raised to 20%. The measure takes into account that the typical cost ratio in the dining industry is 30%.
In particular, omakase and fine dining were separately classified as a type of "reservation-based restaurant," as cancellations require discarding ingredients that day and make it hard to expect another customer within a short period. Reservation-based restaurants can charge up to 40% of the total bill as a penalty.
The revision also allows general restaurants to set no-show penalties for group orders at a level comparable to reservation-based restaurants, as no-shows cause significant damage. However, it clarified that this applies only if the restaurant has given prior notice of the penalty to customers. Without such notice, large orders are considered under general restaurant rules, not reservation-based restaurants.
If the reservation deposit received by the restaurant is less than the penalty, the restaurant must return the difference to the customer. A reservation deposit is the amount a customer pays to make a reservation; while it draws on the same funds as the no-show penalty the establishment collects, it is conceptually different. The commission also said that restaurants seeking to treat tardiness as a no-show must inform customers of that standard in advance.
The revision also raises penalty fees for wedding halls. Currently, even if canceled on the wedding day, the total penalty expense is 35%. The commission adjusted penalties by cancellation timing to 40% for 29 to 10 days before the wedding, 50% for 9 to 1 day before, and 70% for same-day cancellations.
Currently, if a business and a consumer sign a contract and the wedding hall provides additional counseling with dedicated staff for a customized event at the consumer's request, it is difficult to recoup the expense if the wedding is canceled; this will also change. The commission allowed a wedding hall, with the consumer's prior written consent, either to cancel the contract without a penalty or to claim counseling fees limited to the expense incurred for detailed counseling provided after the contract was signed.
Also, in lodging, free same-day cancellation has been allowed only when it is impossible to use the accommodation due to a natural disaster; under the revision, free cancellation will be allowed when a natural disaster occurs on any part of the route from the point of departure to the accommodation.
The commission said, "This revision updates the standards to enable fair and smooth dispute resolution in line with changes in consumption trends and industry conditions." It added, "We will ensure that the Consumer Dispute Resolution Standards, established in 1985, continue to respond flexibly to changing times so they can substantively contribute to protecting consumer rights and improving consumer life."