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As cases of consumer harm have increased (Korea Consumer Agency 1372 Counseling Center, 16 cases in 2016→590 cases in 2020) along with the expansion of online video service subscriptions, the Korea Fair Trade Commission (led by Chairperson Sungwook Joh, hereinafter referred to as the \"KFTC\") reviewed terms and conditions of six online video service platforms operating in Korea (Netflix, Wavve, Tving, Seezn, Watcha, and Google) and ordered them to correct unfair clauses regarding subscription cancellation and refund, one of the causes of above mentioned consumer harm.

First, Netflix did not provide refunds even when a membership is cancelled before the monthly billing period ends and customers had to use the service until the last day. However, from now on, in the case of causes attributable to the service provider or customers not using the service, refunds will be provided if it is cancelled within seven days after the billing date. Service providers including Watcha also made this revision since they have terms and conditions which are the same with or similar to those of Netflix.

Secondly, the clause regarding unfair cancellation fee has been revised. For refunds made due to causes attributable to the service provider or customer, cancellation fees were charged only to customers. For example, Wavve and Tving members were required to pay 10% of the fee charged for the remaining days and Seezn members had to pay the total amount charged for the remaining days.

Thirdly, the KFTC made service providers (Wavve, Tving, Seezn) revise clauses limiting consumer\'s cancellation right guaranteed by the Act on the Consumer Protection in Electronic Commerce. The service providers limited the right to cancel even when consumers did not actually use streaming or download services simply because the limitations in the withdrawal of subscription are stated in their terms and conditions. After the revision, reasons behind limiting the withdrawal right have been clarified, for instance, in cases when streaming and download activities have been recorded.

Fourthly, clauses related to arbitrary price change and modification of important service details without prior notice and consent have been revised. Service providers need to get prior consent, notify and give explanation in advance when making changes like price adjustments. Before the revision, fees and details of paid services were changed arbitrarily and frequently without notifying or obtaining consent from customers (YouTube Premium), or price adjustments were made when necessary for operation (Watcha). Customers consider price and service details as important factors when they agree to terms and conditions. Therefore, making changes to these factors and applying them in a direction unfavorable to customers without notice is unfair and service providers need to clearly inform customers and obtain their consent.

Fifthly, service providers that do not make it a rule to give cash refunds (Wavve, Tving) and do not give refunds for cyber money gifted to customers (Tving, Watcha, Seezn) corrected their clauses, so compensation in cash and refunds can be offered to customers. According to the Civil Act, the basic rule of compensation for damage is monetary compensation and since restoration of original state is required when terminating the agreement, not offering refunds for cyber money gifted to customers is unfair.

Sixthly, the KFTC made service providers revise clauses regarding termination and immediate deactivation of accounts without clear reasons (YouTube Premium, Watcha), and they now have to give specific reasons for such actions. Reasons for immediate deactivation of accounts need to be strong enough and specifically mentioned, but these providers stipulated them in broad terms such as \"if one violates certain conditions\" (YouTube Premium) or \"if one violates obligations prescribed in these terms and conditions\" (Watcha).

From now on, the KFTC will continue to strengthen its watch on unfair terms and conditions of online platforms. In addition, when necessary, the KFTC will review establishment of standard terms for areas where cases of consumer harm have been reported frequently.

*The Korean text of the documents is confirmed to be authentic and English version is only for reference

[Adhesion Contract Division, January 28, 2021]