Excessive Damages for Breach of Contract for Overseas Travel and Frequent Change in Itinerary

- Analysis of Applications for Damage Redress Regarding Overseas Travel -

    Consumer damage concerning overseas travel is continuously on the rise. In fact, travel agents demand a large amount of damages for breach of contract or randomly change travellers’ itineraries and accommodations, which raises consumers’ awareness.

    Korea Consumer Agency (www.kca.go.kr) received 2,877 applications in total for such damage redress from January 2012 to June 2016 and the number is increasing annually. In particular, the number of applications received was 445 in the first half of 2016, 29.4% increase year on year.

     □ More than half of damage reported were caused by breach of contract

    The analysis of 1,204 cases applied from January 2015 to June 2016 indicates that the biggest cause for damage was breach of contract, accounting for 51.7% (622 cases), followed by non- or partial fulfillment of contract (25.5% or 307 cases) and iniquity (14.0% or 168 cases).

     When consumers cancel contracts due to personal reasons (i.e. illness) or insecurity of the destinations (i.e. bad weather), travel agents often impose much more penalty on consumers than Regulations on Consumer Dispute Resolution suggests. Even when contracts were breached at travel agents’ fault, they did not give a decent refund or compensation.

    For damage from non- or partial-fulfillment, some agents changed itineraries and accommodations with randomness and often did neither deliver proper booking services nor give suitable information to consumers. For iniquity, agents forced certain options to consumers, provided unfaithful guides, and required extra fees apart from the fees prescribed on contract.

    In addition, injuries caused by accidents or illnesses during trips (i.e. food poisoning), theft, loss, and breakage of personal items were also reported.

    □ Top 3 agents of damage settlement- MODU Tour, KRT, and HANA Tour

    Among 1,204 applications for damage redress, 49.2% of cases were settled between the parties in accordance to the recommendation of the KCA on refund, compensation, and fulfillment of contract.

    Agents’ with the highest dispute settlement rates among top 10 agents applied for damage redress are: MODU Tour 68.2%, KRT (64.6%), HANA Tour (62.0%). Yellow Balloon Tour (39.2%), Onnuri Tour (45.5%) have relatively low settlement rates.

     Six agents including Very Good Tour, Palm Tour, Online Tour, Interpark Tour, Tour Icheon, and Yellow Balloon Tour had the biggest percentage in damage from breach of contract. For MODU Tour, HANA Tour, and Onnuri Tour, non- or partial- fulfillment of contract was the main cause for the application, and for KRT was iniquity.

    In destination-wise perspective, South East Asia had the biggest share of the whole applications (39.4%), followed by Europe (22.4%), China (12.8%), and the Americas (9.8%).

    The KCA held a meeting with the tourism industry based on the analysis, recommended that travel agents should give more information to consumer prior to departure, minimize changes in itinerary and accommodation, and assure consumer’s rights to select options if changes are inevitable, in order to reduce consumer damage. In this regard, the travel agents showed their commitments to minimise damage through establishing department in charge of consumer protection.

    The KCA also requested consumers to meticulously check the contract including terms and conditions, to plan their trip after checking safety information of destination or their health conditions, ask for more prompt action to the agents/guides in case of accident or illness during the trip and secure evidence for demonstrating such cases.