KTFC orders OTT services to notify customers before end of free trials

Netflix logo / Yonhap

By Kim Jae-heun

The country's top antitrust watchdog ordered over-the-top (OTT) services here to inform customers in advance when their free trial ends and turns into paid membership.

The Korea Fair Trade Commission (KFTC) held a meeting of the Consumer Policy Committee last week and specifically mentioned Netflix to indicate that the American online video streaming service, along with other local players, should not begin to charge customers membership fees without prior notification.

Netflix currently offers a one-month free trial of its service to Korean audiences, but requires a personal payment method to complete registration which will be automatically charged a minimum 9,500 won to 14,500 won depending on the membership type when the trial expires and the next month billing cycle commences.

The committee is a pan-government control tower handling consumer policy issues and it is composed of representatives from eight relevant authorities including the KFTC and civic group. It recommends improvements for consumer-related systems while establishing and coordinating related policies.

Regarding the subscription economy, the Consumer Policy Committee said that although it provides a convenient and economical option to potential customers, their rights and interest may be violated through service providers' opaque practices.

The committee pointed out that consumers were given an inadequate explanation of the commencement of paid membership programs after expiry of free trials. The service fees could also occasionally increase without notice, and some services even changed the membership program. In addition, companies made it difficult to cancel the paid membership and put restrictions on receiving refunds.

The committee also urged the KFTC and the Ministry of Culture, Sports and Tourism to revise the lower statute of e-commerce law and guidelines to protect content customers.

Meanwhile, the committee tackled other issues to prevent consumers being taken advantage of. It ordered mobile carriers not to impose penalties on customers changing mobile network services, manufacturers to correctly indicate the origin of products and wireless earphone makers to standardize device performance measurements.

For 2021, the committee shared a new plan to strengthen the responsibility of platform operators in order to promote the creation of a reliable trading environment.

It also announced an initiative to beef up consumer education for school students regarding e-commerce as mobile and online payment systems have become the norm.