59.3% of telecom membership points expire without being used

 - Need to expand the ways consumers can redeem their membership points into paying for mobile telecom expenses(data usage·voice calls), etc. -

     Recently, many people have been using their telecom membership reward points when purchasing goods or services to cut back on their living expenses. On this account, the Korea Consumer Agency(KCA) conducted surveys in order to find out how three major mobile phone service providers manage their membership points programs, and how consumers use their membership points. The survey revealed that most consumers thought that the point benefits were important, but they had not used 59.3% of their earned points within the validity period.

     Depending on membership level, a consumer is given 40,000-120,000 points per annum, and these points can then be used to buy goods or services from specific merchants or shopping malls designated by mobile phone service providers. The points are given on the first day of the year(January 1) and expire on the last day of the year(December 31)(When a consumer cancels his/her mobile phone subscription, any remaining points are forfeited immediately).

□ Consumers frequently use their points at convenience stores and bakeries, and think that the points help reduce their living expenses.

      In the survey, 72.7 percent of the respondents said that the ‘membership point benefits were important’, and recognized the membership points as an important part in mobile phone services.

     The respondents used their points 3.75 times per month on average, and the points were frequently used at convenience stores, bakeries, and theaters respectively. In addition, 47.0 percent of the respondents said that the membership points were helpful to reduce their living expenses. With regard to this response, females gave more positive responses than males, and respondents in their 20~30s said more positively than those in their 50s.

□ Due to restrictions on the percentage of points permitted for payment, limits are put on the amount of points consumers can redeem.

     Membership points can be used up to 5-20% of the amount spent when consumers purchase goods or services, and there are also limits on the number of transactions(normally 1-2 times) that consumers can do in a day or in a week at merchants or shopping malls to make use of their points. Since product prices sold at convenience stores and bakeries that consumers frequently use are small, there are limits on the amount of points that the consumers can use even though they have many points.

     The survey of 142 users whose use of membership points could be identified found that in 2016, out of 81,452 points which were the average per capita points given by telecom companies, the users used only 33,155 points(40.7%), and the remaining 48,297 unused points(59.3%) ended up disappearing without being used.

     With regard to membership point-related consumer complaints, 36.6% said that ‘the percentage of points permitted for payment was low’, 22.2% said that ‘there were not many available merchants or shopping malls where consumers could use their points’, and 20.5% said that ‘all unused points expired at the end of the year’.

     Furthermore, as part of the resolution of complaints, more than half(52.3%) of the survey respondents requested that the membership points be used to pay for telecom costs.

□ Those not enrolled in membership rewards programs are unable to earn membership points.

     In order to receive membership reward points, consumers must join the membership rewards programs offered by mobile phone service providers separately from subscription to the mobile phone services.* Therefore, it is necessary to make membership joining procedures simpler so that the consumers can easily join the membership rewards programs when they subscribe to the mobile phone services.

*As of 2013, around 35% of mobile phone service subscribers joined the membership programs (source: the office of lawmaker Kihyun Kim).

The KCA expects that if the membership reward point programs could be improved to allow the reward points to be used more easily and widely, it would help reduce household expenses including mobile phone expenses. Accordingly, the KCA plans to request related associations and organizations to ▲increase the percentage of reward points permitted for payment, and ▲gradually expand the ways consumers can redeem their membership points including payment for voice calls, and mobile data purchase.