Fair Trade Commission fines HYBE, YG, SM, and JYP for violating online consumer rights

On August 12, 2024, TV Chosun reported that the Fair Trade Commission fined HYBE, YG Entertainment, SM Entertainment, and JYP Entertainment (the Big Four companies) for obstructing consumers' rights.

The Fair Trade Commission (FTC) found that the Big Four companies unjustly limited customers' ability to cancel subscriptions or order K-pop idol merchandise. The FTC issued remedial orders, warnings, and fines totaling 10.5 million won (around $7,663.53) for the companies' unreasonable refusal to provide refunds.

HYBE was fined 3 million won (around $2,189.53), followed by YG Entertainment, SM Entertainment, and JYP Entertainment, which were fined 2.5 million won (around $1,824.61) each.

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Fair Trade Commission penalizes HYBE, YG, SM & JYP for deliberately obstructing consumers' rights

The Fair Trade Commission underscored that these companies violated the Electronic Commerce Act by reducing the cancellation period on their online stores below the legal minimum and declining to issue refunds if a product opening video was not included.

The organization believes that since a majority of the fandom consists of teenagers, they are more susceptible to getting fooled by online purchases. They told TV Chosun,

"This measure is significant in that it detects and corrects illegal activities in the entertainment industry targeting teenagers."

The Fair Trade Commission found HYBE in violation by not offering refunds for misplaced or returned merchandise orders and failing to tell the customer service center about supply periods on time. HYBE also refused to accept returns and refunds for unboxed packages and refused to compensate for lost products.

Additionally, YG Entertainment was penalized for not accepting cancellations and returns of K-pop group merchandise only because customers changed their minds. According to the FTC, YG Entertainment also did not accept returns for goods that featured unreleased videos of the product. Several fans would order products and film unboxing videos, only to return the merchandise later and ask for a refund.

TV Chosun reported that YG Entertainment would refuse such product returns and cancellations. Additionally, when the pre-order time ended, they were not taking returns, exchanges, or cancellations of custom-made items. The Fair Trade Commission, therefore, chose to enforce warnings, remedial orders, and fines against them.

Meanwhile, SM Entertainment clearly mentioned in its policies that damaged goods will not be refunded or accepted. Fans can apply for a return refund of goods within seven days of the item's delivery; otherwise, they would forfeit their chance of getting a refund.

Furthermore, SM Entertainment requires a video showing the customer opening the package after receiving it. Without this video, the company refused to accept any return or cancellation application. Additionally, SM Entertainment missed informing customers about products without a return/exchange policy.

JYP Entertainment was fined by the Fair Trade Commission for similar reasons. The company refused to accept return or cancellation applications for custom-made K-pop group merchandise. They, too, have applied a seven-day return window, after which a refund will not be allowed.

JYP Entertainment also stated that returns must be made within seven days after the delivery date in the event of a faulty or erroneous delivery. After 30 days, customers will not get any chance of reimbursement or redelivery in the event that a product is lost.

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In other news, the FTC also investigated HYBE for allegedly falsifying company documents. They sent their auditors to conduct an on-site investigation at the HYBE headquarters.