The Fair Trade Commission (FTC) announced today (August 24) that it is holding a legislative notice for a revision to the "Guidelines for Consumer Protection in Prepaid Installment Transactions" through September 14, which includes the establishment of new internal control regulations for prepaid installment businesses.
Prepaid installment transactions refer to contracts where goods or services are paid for in installments over two or more months and in two or more payments, with the goods or services being supplied after all or part of the payment has been made.
These types of contracts are mainly used for funeral services (sangjo) and travel packages.
The revised guidelines explicitly state that prepaid installment businesses must establish internal advance payment management guidelines to ensure the stable operation of advance payments.
They also require businesses to establish advance payment operation plans for each fiscal year.
In addition, the amendment stipulates that prepaid installment businesses with advance payments totaling 100 billion won or more must establish and operate an Advance Payment Management Deliberation Committee, and consult external experts when reviewing transactions with related parties or high-risk asset investments.
Furthermore, the revision specifies that businesses must balance stability, liquidity, and profitability when operating advance payments to ensure there is no shortage of funds needed for future supply of goods or payment of cancellation refunds.
It also includes provisions requiring sufficient review prior to trading high-risk assets such as derivatives.
Feedback regarding the administrative notice can be submitted to the FTC's Special Transaction Policy Division via fax (044-200-5232) or email (100ro@korea.kr).
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