By Sim Chang-hyun
Canceling a reservation and getting a refund is one of the most common problems a consumer faces. Many of us have stories of hassles encountered while trying to get our money back.
In the sharing economy, too, the number of issues reported regarding cancelations and refunds has been increasing as more people begin to use related services. In Korea, this is exemplified by a dispute between Airbnb and the Fair Trade Commission (FTC), the Korean government’s regulatory agency for economic competition.
Here is a short description of what happened in 2016 and 2017. The FTC stated on March 4, 2016, that some clauses in Airbnb’s refund policy were disadvantageous to consumers and subject to the Act on the Regulation of Terms and Conditions. On November 15, 2016, the FTC officially forbade Airbnb from using its refund policy.
Airbnb filed a revised policy to the FTC on March 15, 2017. According to this policy, the refund conditions were supposedly less disadvantageous than before. Airbnb began to apply its revised refund policy to Korean guests on June 2, 2017.
Unfortunately, it seems that the FTC did not believe that the new policy was satisfactory. The FTC filed a complaint with prosecutors, arguing that Airbnb did not fulfill its administrative order effective on November 15, 2016. The media paid a lot of attention to this action by the FTC, as it was its first complaint against a global company.
Airbnb argued that it conducts business all over the world, and every one of the 191 countries where it is present has its own policy, so that made it impossible to change all its policies to follow the FTC’s directive.
Further developments on the prosecutors’ side are still unclear. Neither the FTC nor Airbnb has shown any definitive steps since then. However, the complaint by the FTC suggests that Airbnb guests have been forced to pay refund charges to both Airbnb hosts and Airbnb. The FTC initially raised this issue, stating that the structure of the refund charges levied by Airbnb was too disadvantageous to consumers.
It is perhaps a sign that, as the sharing economy increasingly becomes global, local regulatory agencies and service providers will clash more and more.
Sim Chang-hyun started his career as co-founder of a social venture before he joined Kyunghee University Law School. Three years of work experience in startups will help him provide HMP Law’s clients with the best legal solutions.