Fair Trade Commission reviews 24 companies, orders fixes to 8 types of unfair terms

Paid fan club memberships for K-pop idol groups — which offer perks such as priority concert ticketing and exclusive merchandise — have been found to contain numerous contract terms that unfairly disadvantage consumers.

The terms included clauses that excessively restricted refunds and shielded companies from liability even in situations such as a group member's departure.

According to the Korea Fair Trade Commission on Wednesday, a review of paid fan club membership terms and conditions at 24 entertainment and fandom platform companies identified eight categories of unfair contract clauses.

Foreign visitors browse K-pop albums on display at a K-pop merchandise shop on Myeong-dong street in Jung-gu, Seoul. [Yonhap]
Foreign visitors browse K-pop albums on display at a K-pop merchandise shop on Myeong-dong street in Jung-gu, Seoul. [Yonhap]

The most common violation involved refund restrictions. Big Hit Music specified that refunds are unavailable once seven days have passed since a membership was purchased or after any benefit has been used. Starship Entertainment similarly allowed cancellations within seven days of payment but barred refunds if even a single benefit had been used.

The commission noted that paid fan club memberships are closely tied to an artist's activity schedule, making it difficult to deliver benefits on a regular or fixed basis, and that the benefits available can vary depending on when a member signs up.

In response, the commission determined that consumers dissatisfied with the benefits they receive must be able to withdraw and request a refund mid-term, and that clauses blocking such requests are unreasonably disadvantageous to consumers.

Under the revised terms, companies will be required to guarantee a full refund within seven days of sign-up if no benefits have been used. After seven days or after any service use, companies must refund the remaining balance after deducting a cancellation fee — typically 10 percent of the membership fee — and any amount already used.

Clauses that excessively exempted companies from their obligations and liabilities were also flagged. SM Entertainment had informed members that canceling a payment after a membership renewal would not restore the remaining period of the previous membership. The commission said companies are obligated to restore the pre-renewal status when a consumer cancels a renewal.

YG Entertainment had stipulated that refunds are unavailable when it cannot provide content related to members who have been added, left or replaced. Kakao Entertainment specified that it bears no responsibility for service disruptions caused by members themselves, while CJ E&M included a clause limiting its liability for damages resulting from unauthorized third-party access or illegal use of its servers.

The commission ruled that blanket liability exemptions covering even matters within a company's own management responsibilities — such as an artist's departure — are unjustifiable, and called for the relevant clauses to be corrected.

Antenna and Weverse Company had reserved the right to suspend membership services citing business reasons, effectively restricting users' rights.

The commission found the stated grounds for service changes or suspensions to be excessively vague, and directed companies to specify concrete reasons such as corporate splits or mergers, business transfers or closures, the end of operations, or the expiration of an artist's exclusive contract.

Blue Garage, which operates the paid membership for JYP Entertainment, had allowed the company to terminate service agreements based on ambiguous standards such as "reasonable judgment." Nomuss had permitted contract termination without any prior notice to users.

Following the commission's findings, companies will be required to define the grounds for contract termination and service restrictions more clearly, give consumers an opportunity to respond before any action is taken, and proceed with termination or restrictions only if the issue remains unresolved.

Additional violations included clauses allowing companies to unilaterally delete user posts, as well as broadly worded provisions governing the sharing of personal data with third parties and the duration of data retention.

Companies plan to revise refund-related clauses this year and amend the remaining terms as soon as possible.

Kwak Go-eun, head of the Fair Trade Commission's Terms and Special Transactions Division, said the review was a proactive step taken as the K-pop market continues to expand globally. She expressed hope that the measures would help protect consumer rights and establish a fair and transparent trading order befitting the K-pop fandom market.


y2k@heraldcorp.com