Latest news with #KoreaFairTradeCommission
Korea Herald
17-02-2025
- Business
- Korea Herald
Major banks face antitrust scrutiny over lending limit collusion
South Korea's antitrust watchdog is pushing ahead with its reinvestigation into four major banks over their possible engagement in collusive activities by exchanging lending limit information. The Korea Fair Trade Commission sent investigators to the headquarters of KB Kookmin Bank and Hana Bank on Monday following its on-site probe into Woori Bank and Shihan Bank last week. The country's top four commercial lenders allegedly shared 7,500 loan-to-value (LTV) ratio data from 2020 to 2022 then lowered the lending risk assessment ratio to a similar level, thereby limiting market competition and taking illicit gains. The LTV ratio is a measure used by lenders to assess a loan's risk. It is calculated by dividing the loan amount by the appraised market value of the asset being used as collateral. The watchdog believes the banks in question intentionally set their respective LTV ratios at low levels, which could force some borrowers to rely on credit loans with relatively high interest rates. Given the different timings and trends in which each lender changed their LTV ratios, the banks have denied the allegations. However, the FTC is focusing more on whether the banks agreed to collude than the concerted actions that allegedly followed. 'The figures (LTV ratios) may not be perfectly matched, but an agreement (between banks) can be seen as illegal. It is difficult to say that they have no problem just because they took different actions or some did not fully implement what they agreed on,' said an official at FTC's Cartel Investigation Bureau. The banks could face hundreds of billions of won in fines if convicted of the charges in accordance with the fine rate of up to 20 percent of revenue from the business related to anti-competitive activities. The interest income of these four banks in 2022, the period of alleged collusion, exceeded 40 trillion won ($27.76 billion). Some market watchers have also pointed out that the watchdog's accusation is excessive, saying lowering the LTV ratio does not directly trigger increases in borrowing rates. 'There are various factors affecting rates, not just LTV. But if the ratio has any influence, it's worth taking a look at,' the FTC official said. Having first opened in February 2023, the collusion case was expected to conclude in November 2024, but it was decided to revisit the case during the FTC's plenary meeting, which cited the need for further confirmation of claims from investigators and banks. 'The FTC will swiftly complete the reinvestigation and put the case before the committee. After that, the banks will go through the process of vindication and the final decision will be made at the plenary session of the FTC,' the agency said in a statement. If the four banks are proven to have conspired over the LTV ratio, it will be the first time for the FTC to impose sanctions on charges of "information exchange collusion." Through the Korean Fair Trade Act amended in 2020, the watchdog established a legal basis that views concerted actions through information exchange, such as prices and production volume between businesses, can be presumed as collusion.
Korea Herald
11-02-2025
- Business
- Korea Herald
Can't cancel that subscription? Korea is cracking down on ‘dark patterns'
From frustratingly difficult-to-cancel subscriptions to hidden shipping fees, dark patterns -- manipulative online design tactics that trick consumers into spending more -- are widespread in South Korea's e-commerce market. Now, the government is taking action. Starting Feb. 14, the Korea Fair Trade Commission will enforce new regulations under the revised Electronic Commerce Act aimed at curbing misleading practices that obscure pricing, complicate cancellations and pressure users into unwanted purchases. Dark patterns pervade South Korea's digital landscape. A 2024 report by the Korea Consumer Agency found that 47 new types of dark patterns emerged last year, adding to the 429 cases identified in a 2023 investigation of major online shopping platforms. The most common complaints included: Hidden fees, such as shipping charges, that only appear at the final stage of checkout False urgency, where sales countdowns reset indefinitely to pressure shoppers into hurried purchases Preselected add-ons, such as travel insurance automatically included when booking flights Obstructed cancellations, making it unnecessarily difficult to unsubscribe from a service Repeated pop-ups, aggressively urging users to reconsider their decisions The rapid evolution of these deceptive tactics has made enforcement difficult. New variations of dark patterns are discovered almost weekly, according to the KCA. What the new regulations change The KFTC's new regulations introduce stricter consumer protection rules in four key areas: Subscription services: Businesses must notify users at least 30 days before converting free trials into paid subscriptions or raising prices. Without this, they face fines or up to a one-year business suspension. Transparent pricing: Retailers must clearly display the total cost upfront rather than revealing extra fees (such as shipping or service charges) in later steps of the transaction. If certain costs cannot be displayed immediately, the reason must be clearly explained. No more forced add-ons: Companies cannot pre-select optional services or products without user consent. For example, airline websites can no longer automatically add travel insurance to ticket purchases. Simpler cancellations: Deliberately hiding, complicating or obscuring the cancellation process is now prohibited. Companies that violate these rules face fines that increase with repeated offenses, up to 5 million won ($3,450) for the third violation and subsequent offenses. Repeat offenders may also face a one-year suspension of operations. Is the law strong enough? While the law is an important step toward fairer digital commerce, experts warn that enforcement challenges remain. The fines are relatively small, especially for major Korean tech firms and e-commerce giants. Unlike more direct legislation in the US and European Union, like the California Online Privacy Protection Act and the EU's Digital Services Act, South Korea's approach does not provide a clear mechanism for compensating consumers who have already been misled. 'Right now, the Korea Fair Trade Commission can only respond within the limits of its enforcement powers through continuous monitoring. If a more long-term solution is needed, it should be addressed through stricter legislation. Stronger penalties are necessary to deter businesses that repeatedly engage in these deceptive practices,' said Lee Jung-hee, a professor of economics at Chung-Ang University.
