Starting on the 1st of next month, businesses that repeatedly violate the Door-to-Door Sales Act, the Act on Fair Labeling and Advertising, or the Installment Transactions Act may face a penalty surcharge doubled.
The Korea Fair Trade Commission said on the 9th that a revision to the enforcement decrees of the Door-to-Door Sales Act, the Act on Fair Labeling and Advertising, and the Installment Transactions Act, which raises the penalty surcharge aggravation standard for businesses with four or more violations from the current 50% to 100%, passed the Cabinet meeting. The Korea Fair Trade Commission (FTC) counts violations over the past five years. Also, until now, businesses with only one past violation did not face an aggravated penalty surcharge, but going forward, an increase of more than 40% and up to 50% will apply.
Factors for reducing penalty surcharges will be narrowed. If a violating business worked to compensate consumers, it could have its penalty surcharge reduced by up to 30%, but going forward only up to 10% will be possible. In addition, under the Act on Fair Labeling and Advertising, cooperating with investigations and deliberations into violations could reduce the penalty surcharge by up to 20%, but that will be cut to 10%. Because the Door-to-Door Sales Act and the Installment Transactions Act do not have provisions for penalty surcharge reductions for cooperation in investigations and deliberations, the Korea Fair Trade Commission (FTC) revised only the enforcement decree of the Act on Fair Labeling and Advertising.
The penalty surcharge assessment-rate framework under the Act on Fair Labeling and Advertising will also change. Under that act, the penalty surcharge is calculated by multiplying the sales related to the violation by the seriousness level (assessment rate). If the assessment rate rises, the penalty surcharge also rises. Currently, for a "very serious violation," the assessment rate is 1.6% to 2%, but it will change to 1.8% to 2%. Because sanctions under the Door-to-Door Sales Act and the Installment Transactions Act are, in principle, business suspension rather than penalty surcharges, they were not included in this enforcement decree revision.
The Korea Fair Trade Commission (FTC) said, "We expect to secure greater deterrence against business violations in areas where consumer protection is especially needed, strengthening the law's core function of protecting consumer rights."