KCA to form and operate a Consumer Damage Response Task Force in order to respond

to consumer disputes related to COVID-19

- Response to be concentrated on disputes over penalties for breach of contract in the major business fields, 

including travels, baby’s first-birthday parties, etc. -

As an increasing number of disputes are being reported over penalties for breach of contract due to COVID-19, the Korea Consumer Agency (President Lee Hee-Sook) plans to actively respond to the disputes by forming and operating a ‘COVID-19 Consumer Damage Response Task Force.’

□ Number of consumer counseling cases related to penalties for breach of contract following the outbreak of COVID-19 saw a 8.1-fold increase compared with last year.

The number of consumer counseling cases related to penalties for breach of contract in five (5) major business fields received by 1372 Consumer Counseling Center* during the period from January 20 to March 10, 2020, following the outbreak of COVID-19 amounted to 15,682 in total, an 8.1-fold increase from the same period last year (1,926 cases). The main cause for the increase was found to be a sharp increase in contract cancellations and terminations due to COVID-19.

 *  1372 Consumer Counseling Center is a nationwide integrated consumer call center that involves 10 consumer groups, 16 local governments, and the Korea Consumer Agency.

Among the five (5) major business fields, ‘overseas travel (7,066 cases)’ accounted for 45% of the total number of counseling cases (15,682 cases), and ‘catering services (a 22.2-fold increase) for events and anniversaries,’ including baby’s first-birthday parties, hit the highest increase compared with the same period last year.

[ Number of consumer counseling cases related to penalties for breach of contract following the outbreak of COVID-19 (five (5) major business fields) ]

                                                                                                                                                                              (unit: number of case)

The number of applications for damage redress** related to penalties for breach of contract due to COVID-19 in the five (5) major business fields received by the KCA for the same period this year (January 20~March 10, 2020) was 680 in total.

** Apply for counseling at 1372 Consumer Counseling Center -> Counselors give advice on how to respond to issues involving consumer damage -> Apply for damage redress at the KCA if a consumer fails to resolve an issue through counseling -> If the parties to a dispute fail to reach a settlement, they can apply for dispute mediation by the Consumer Dispute Settlement Commission (CDSC).

By business field, ‘overseas travel (241 cases or 35.4%)’ accounted for the largest share of the total number of applications for damage redress due to COVID-19, followed by ‘catering services (151 cases or 22.2%)’ for anniversaries and events, including baby’s first-birthday parties, and ‘airlines (140 cases or 20.6%).’

[ Number of applications for damage redress related to COVID-19 (five(5) major business fields, January 20~March10) ]

                                                                                                                                                                                                          (unit : number of case, %)

Among 680 applications for damage redress related to penalties for breach of contract due to COVID-19, 330 cases were processed, and the other 350 cases are being processed. Among the 330 processed cases, 165 (50%) were settled with an agreement on the reduction of penalties between the parties to the disputes, and the remaining 165 were processed by applying for dispute mediation by the CDSC or by giving advice on the procedures for legal action because the dispute parties failed to reach a settlement.

□ KCA to rapidly respond to consumer counseling and damage redress related to COVID-19 by forming a Consumer Damage Response Task Force.

 In order to proactively deal with disputes over penalties for breach of contract due to COVID-19, the KCA has strengthened its consumer damage redress readiness by adding one more to the existing response team in February, and operated a rapid response system to analyze the daily trend of consumer counseling and damage redress and share it with relevant government ministries and local governments.

In addition, in order to actively respond to an increasing number of disputes over penalties for breach of contract and the WHO’s pandemic declaration, it will form and operate a ‘COVID-19 Consumer Damage Response Task Force (Head: Executive Director),’ beginning March 16.

President Lee Hee-sook of the KCA has emphasized smooth settlement of the disputes over penalties for breach of contract by saying “as the COVID-19 outbreak was totally unpredictable, it is necessary for the dispute parties to take into consideration the current difficult situation, and make concessions to each other.”