Skin and beauty clinics that blocked refunds on grounds such as a change of mind, dissatisfaction with results or the passage of time — and charged cancellation penalties of up to 30% of the amount paid — have been ordered by the Korea Fair Trade Commission to correct unfair contract terms in their prepaid treatment agreements.

Going forward, patients who cancel mid-contract will be entitled to a refund of the remaining balance after deducting the cost of treatments already received and any penalty set under the Consumer Dispute Resolution Standards.

Plastic surgery and dermatology clinics near Apgujeong Station in Gangnam-gu, Seoul. This photo is not directly related to the article. [Herald DB]
Plastic surgery and dermatology clinics near Apgujeong Station in Gangnam-gu, Seoul. This photo is not directly related to the article. [Herald DB]

The Fair Trade Commission said Sunday it had reviewed the prepaid treatment terms of 15 clinics that generated the highest number of consumer complaints filed with the Korea Consumer Agency between 2023 and 2024, and directed them to voluntarily correct six categories of unfair clauses.

The six categories were: restrictions on contract cancellation and termination, excessive predetermined damages, exclusion of operator legal liability, prohibition on filing lawsuits, restrictions on transferring prepaid treatment vouchers, and clauses allowing operators to unilaterally determine or change service terms.

Restrictions on contract cancellation or termination were the most common, found at 13 clinics. Clauses prohibiting lawsuits and those restricting the transfer of prepaid treatment vouchers were each identified at 10 clinics. Seven clinics had clauses excluding operator liability, while two had clauses setting excessive penalty amounts.

Prepaid treatment plans require patients to pay a lump sum upfront and draw down that balance for procedures. Because payment is made in advance, disputes over refunds upon mid-contract cancellation are common.

A total of 1,150 consumer complaints related to prepaid treatment were filed with the Korea Consumer Agency between 2021 and 2024. Of those, 956 cases, or 83.1 percent, involved disputes over contract cancellation, termination or penalties.

The Fair Trade Commission determined that clauses restricting refunds on grounds such as a change of mind, subjective dissatisfaction or the passage of a set period unlawfully curtailed consumers' right to cancel or terminate a contract.

The commission ordered those clauses deleted and required clinics to revise their terms so that, upon mid-contract cancellation, the remaining balance is refunded after deducting the cost of completed procedures and any applicable penalty under the Consumer Dispute Resolution Standards. Where a consumer cancels after treatment has begun, the penalty under those standards is 10 percent of the total treatment cost.

Clauses imposing penalties of 20 to 30 percent of the amount paid were also corrected. Some clinics' terms had allowed them to deduct 20 percent of the total payment plus the standard price of procedures already received when refunding unused sessions, or to withhold 30 percent of the total amount paid as a penalty when a contract was cancelled after treatment began.

The commission found these provisions excessive given that the Consumer Dispute Resolution Standards set the penalty at 10 percent of total costs, and ordered the clauses removed so that the standards-based penalty would apply instead.

Clauses exempting operators from legal liability and those barring consumers from filing lawsuits were also deleted. Provisions restricting the sale or transfer of prepaid treatment vouchers were revised to allow transfers to third parties.

The terms were also revised to ensure that if an assigned medical professional leaves or suspends practice, patients who do not consent to being reassigned to a different provider may cancel their contract and receive a refund.

"We expect this action to bring about rational improvements to the refund standards for remaining balances in cancellation and refund disputes — which arise frequently in the prepaid treatment sector — and to eliminate unjustified transfer restrictions," the commission said. It added that it plans to consider establishing standard contract terms for the sector that reflect the corrected provisions.


y2k@heraldcorp.com