Some Guest Houses in Jeju Island run without Permit

- Must check cancellation policy before signing contract -

    As the number of tourist from home and abroad visiting Jeju island increases, guest house is gaining popularity for its price competitiveness and distinctive characteristics, yet, consumer complain is growing.

    * From Jan 2012 to Aug 2016, the number of consumer complains on Guest-house reported to “1372 consumer counseling center” is 581cases. 25cases were reported in 2012, 49 cases in 2013(↑96.0%), 153 cases in 2014(↑212.2%), 200cases in 2015, and 154 cases as of August 2016 which shows that the number of reported cases is on the increase.

    According to Korea Consumer Agency (http://www.kca.go.kr) conducted thorough investigationon 50 guest houses with proper website and reservation system, 8 of them were illegally operating their businesses without business permit under governing law.

    □ 84.0% of investigated guest houses were operated as rural bed and breakfast business. Since guest houses do not have governing laws and regulations, they can report as accommodation business under 「Public Health Control Act」, register as hostel business under 「Tourism Promotion Act」, or report as rural bed and breakfast business under 「Rearrangement of Agricultural and Fishing Villages Act」.

    Among 50 investigated guest houses, 42(84.0%) of them were operated as rural bed and breakfast business under 「Rearrangement of Agricultural and Fishing Villages Act」 and the rest 8 guest houses (16.0%) turned out to have been operating without business permit.

    □ Most refund conditions on reservation cancellation were tougher for consumers than stipulated in 「Regulations on Consumer Dispute Resolutions」. According to KCA research, out of 50 investigated business 41 of them (84.0%) posted both policy and refund rate on their website, while one business posted policy but not refund rate, and the rest eight businesses (16.0%) of them did not inform both refund policy and refund rate at all.

    According to Regulations on Consumer Dispute Resolutions, if a consumer cancels reservation, in case of peak season consumers can get full refund without cancellation fee 10 days before, and 2 days for off-season. However, among 41 businesses that provided information on refund policy and rate, only 29of them (70.8%) followed regulation during peak-season and only three of them (7.3%) during off-season.

    Also, cancellation due to weather change and natural disaster, businesses should refund deposits to consumers who cancel on check-in date but, 19 businesses (46.3%) do not give full refund or did not even stipulate availability of refund on the website.

    Korea Consumer Agency judges that when guest houses are run without business permit operated not under Public Health Act, it could create problems such as consumer dispute, safety, health and give negative impression on tourism that KCA plans to require governing government department and local government to lay out law that separately categorizes guest house into different type of existing accommodation types.

    Also, administrative guidance will be requested on businesses operating without proper permit and make them abide by Regulations on Consumer Dispute Resolutions.

    In order to prevent consumer damages, Korea Consumer Agency recommends consumers to ▲ thoroughly check refund policy before making reservation, ▲print out contract terms in case of consumer dispute, ▲make sure businesses that you booked are properly operating with legal permit under city, local and central government, and see if businesses are normally operating.