From now on, restaurants and lodging businesses that fail to post price lists or do not honor posted prices will face a five-day business suspension starting with the first offense, instead of a warning. In the case of lodging, a fourth offense will require the business to close. Lodging businesses must also file once a year in advance how much they will raise prices in off-peak and peak seasons and adhere to it.
On the 25th, relevant ministries prepared measures to eradicate "rip-off pricing" through the National Tourism Strategy Meeting. The government acted after criticism that foreign tourists were being overcharged, including a surge in lodging prices in Busan during BTS's concert period.
◇ Taxis charging unfair fares face 30-day license suspension at first offense
First, the government decided to toughen penalties for failing to display or comply with prices in the restaurant and lodging sectors. Under current law, violations of the obligation to post and comply with listed prices result in relatively light penalties at the first offense, such as a corrective order or a warning.
Going forward, the plan is to impose a five-day business suspension starting with the first violation. Upon four or more violations, orders for business suspension, business registration cancellation, or business closure will be issued. Notably, rural homestays and foreigner urban homestays previously had no penalty provisions such as business suspension, but new rules will be established.
Lodging businesses will also be penalized if they unilaterally cancel existing reservations for the purpose of raising prices and reselling. As with failure to display prices, a five-day business suspension will be imposed from the first offense. The government also plans to revise rules so consumers can receive deposit refunds or compensation.
Taxis that charge unfair fares will also be sanctioned. A 30-day license suspension will be imposed immediately upon the first detected act, and a 60-day suspension and license revocation will be imposed upon the second and third detections, respectively.
The government aims to implement the strengthened penalties as early as the second half of this year. A government official said, "The goal is to amend the law in the first half," adding, "We will then revise the subsequent enforcement decree and enforcement rules to implement within the year."
◇ Lodging businesses must file annual caps on peak and off-peak prices
The government decided to introduce a so-called "anti-rip-off assured pricing system" (voluntary upfront price filing). Lodging businesses will voluntarily file in advance the cap on "room rates" by case—peak season, off-peak season, weekends, weekdays, special events—and make that public. If a business fails to file such seasonal prices in advance or charges beyond them, penalties such as business suspension will be imposed.
At this time, there will be no separate cap on the "upper limit" of prices filed in advance by businesses. A government official said, "The government will not intervene in the price-setting process," adding, "Instead of setting a separate cap, we will require transparent disclosure of filed prices on the business's own website or lodging reservation platforms (OTAs) such as Yanolja, so consumers can directly compare and choose."
However, the filing cycle will be set at once per year. A government official said, "If filings can be made too frequently, setting a price cap becomes meaningless."
This advance price filing system will first apply only to lodging. The government explained that it is inappropriate to operate such a system for restaurants, considering cost volatility and price disparities by business.
The government referred to a local government ordinance that has stipulated the "advance filing system for rental car charges" in Jeju since 2008. However, recently some rental car companies have used a "trick" of setting initially high filed prices and then offering steep discounts in the off-season, so Jeju revised the ordinance to introduce a "maximum discount rate" regulation. A government official said, "If the system proves effective, we will consider introducing a similar filing system in other regions (in the transportation sector)."
Meanwhile, tourists who experience inconveniences such as rip-off pricing can report them through the integrated local government hotline (☎ area code + 120) or the integrated tourism inconvenience hotline (☎ 1330).