A contract customers sign to take responsibility for all financial damage caused if their PIN code lands in the "wrong hands," is invalid, the Supreme Court ruled Monday.
"In the spirit of fairness, ways of protecting customers ― the parties with less power than credit companies ― should be devised," the highest court said.
"Thus, we deem that the unfair clause is not valid."
However, the court also stated that it is a customer's responsibility to prove that the loss of the PIN was not their fault and they did everything they could to prevent it, if they are spared from the obligation of redeeming losses themselves.
"The cardholders should take the precaution as the manager of their own PIN number," it said. "The burden of proof lies on the customer to be spared from any penalties."
The ruling came in connection with a 2005 lawsuit filed by a Cho, who sued KB Credit Card, which belongs to Kookmin Bank to return about 7 million won the company withdrew from his account. Cho claimed that he had his card stolen when he was drunk and the thief withdrew the sum in cash from his account.
Kookmin Bank countersued. The Seoul Northern District Court gave a partial victory to Cho, ordering the bank to give back 4.2 million won.
The court at that time stated that Cho had nothing to do with the leak of his card number. Cho vehemently denied that there was no way he disclosed his numberr consciously or unconsciously. The appeals court, however, ruled in favor of the bank, pointing out the possibility that while he was drunk, Cho could have told the thief the number.