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INSTALLMENT TRANSACTIONS ACT — 법갈피

영문법령 / INSTALLMENT TRANSACTIONS ACT

INSTALLMENT TRANSACTIONS ACT

법률타법개정시행 2024-08-07공정거래위원회 · 제20239호 · 공포 2024-02-06

CHAPTER I GENERAL PROVISIONS

Article 1(Purpose) #

The purpose of this Act is to protect the rights and interests of consumers, enhance market confidence, and contribute to the sound development of the national economy by ensuring fairness in transactions based on installment contracts and prepaid installment contracts.

Article 2(Definitions) #

The terms used in this Act shall be defined as follows: <Amended on Jul. 24, 2015>

1. The term "installment contract" means any of the following contracts on goods or services (including a right to use a particular facility or a right to receive a type of service, but excluding prepaid installment contracts defined under subparagraph 2; hereinafter referred to as "goods, etc."), irrespective of its name or form:

(a) A contract under which a consumer makes installment payments of the price of goods or services (hereinafter referred to as "price of goods, etc.") on three or more occasions over a period of two or more months to a business operator and receives the goods or services (hereinafter referred to as "provision of goods, etc.") from the business operator before full payment of the price of the goods, etc. is made (hereinafter referred to as "direct installment contract");

(b) A contract under which a consumer makes installment payments of the price of goods, etc. on three or more occasions over a period of two or more months to a credit provider and receives the goods from the business operator before full payment of the price of the goods, etc. is made (hereinafter referred to as "indirect installment contract");

2. The term "prepaid installment contract" means a contract under which a consumer agrees to pay a business operator the price of the goods, etc. specified in any of the following in at least two installments over a period of at least two months and to have the goods supplied by the business operator after fully or partially paying the price, irrespective of its name or form:

(a) Services for funeral or wedding (excluding cases where the time of provision is fixed) and other goods incidental to such services;

(b) Any such goods, etc. equivalent to those prescribed in item (a), which may cause damage to the consumer, as determined by the Presidential Decree for prevention of such damage;

Article 6(Principle of executing installment contract in written form) #

(1) An installment business operator shall conclude an installment contract in written form which indicates each of the following (including an electronic document under subparagraph 1 of Article 2 of the Framework Act on Electronic Documents and Transactions; hereinafter the same shall apply), as prescribed by Prime Ministerial Decree; provided, with respect to an indirect installment contract between a credit card holder and a credit card merchant under the Specialized Credit Finance Business Act, no installment business operator may indicate the matters referred to in subparagraph 4, the date of payment referred to in subparagraph 5 and those referred to in subparagraph 11: <Amended on Jun. 1, 2012>

1. Names and addresses of the installment business operator, the consumer, and the credit provider;

2. Types and details of the goods, etc. and date of provision of the goods, etc.;

3. Cash price;

4. The amount of installments;

5. The amount of each installment, the number of payments, and period and date of payment;

6. The actual annual rate of an installment commission;

7. Down payment;

8. Matters concerning the retention of title over the goods, etc.;

9. Matters concerning the period to withdraw an offer, method of exercise and effect of withdrawal under Article 8;

10. Matters concerning the installment business operator's rescission of an installment contract under Article 11 (1);

11. The rate applied in calculating damages for delay referred to in Article 12 (1);

12. Matters concerning acceleration of a consumer’s obligation under Article 13;

13. Matters on the consumer's rights of defense and methods of exercising those rights under Article 16.

(2) Where concluding an installment contract, an installment business operator shall deliver a written contract under paragraph (1) to a consumer; provided, in the case of an indirect installment contract between a credit card holder and a credit card merchant under the Specialized Credit Finance Business Act, the installment business operator may replace it by sending the terms and conditions of the contract concerned by fax or electronic document delivery referred to in subparagraph 1 of Article 2 of the Framework Act on Electronic Documents and Transactions (hereinafter referred to as "electronic document" in this Article) after obtaining consent from the consumer, and where a dispute arises over the terms and conditions or arrival of the contract sent by fax or electronic document delivery, the installment business operator shall have the burden of proof. <Amended on Jun. 1, 2012>

(3) A credit provider shall issue a written statement indicating the matters referred to in paragraphs (1) 4 through 6, 9, 11 through 13 to a consumer.

(4) If an installment contract fails to meet the requirements under each subparagraph of paragraph (1), or if the terms and conditions thereof are unclear, the terms and conditions of the contract shall not, in any event, be interpreted to the detriment of a consumer unless otherwise specially agreed by a consumer and an installment business operator.

Article 8(Withdrawal of offers) #

(1) A consumer may withdraw an offer of an installment contract within any of the following periods (where a transacting party has agreed on a longer period, referring to such longer period):

1. Seven days from the date on which he or she received a contract under Article 6 (1); provided, where the goods, etc. are provided later than the date on which he or she received the contract, seven days from the date on which he or she received the goods, etc.;

2. In any of the following cases, seven days from the date on which he or she may withdraw the offer, such as the date on which he or she became aware or may have become aware of the address:

(a) Where he or she has not received the contract referred to in Article 6 (1);

(b) Where he or she has received a contract on which the address, etc. of an installment business operator is not stated;

(c) Where he or she cannot withdraw the offer within a period referred to in subparagraph 1 due to a reason, such as the change, etc. of the address of the installment business operator;

3. Seven days from the date on which he or she became aware or may have become aware of the fact that he or she may withdraw the offer in cases where matters concerning the withdrawal of an offer have not been stated on the contract referred to in Article 6 (1);

4. Where an installment business operator obstructs withdrawal of the offer, seven days from the date on when such obstruction ends.

(2) No consumer may withdraw an offer under paragraph (1) in any of the following cases; provided, where an installment business operator approves the withdrawal of an offer or does not take measures referred to in paragraph (6), he or she may withdraw the offer, even in cases falling under subparagraphs 2 through 4:

1. Where goods, etc. are lost or damaged due to a reason attributable to the consumer; provided, this shall not apply to cases where the package, etc. is damaged in order to check the contents of the goods, etc.;

2. Where he or she has used or consumed goods, etc. determined by Presidential Decree, the value of which is likely to be reduced considerably due to such use or consumption;

3. Where the value of goods, etc, is remarkably reduced to the extent that it cannot be resold due to the lapse of time;

4. Where the package of goods, etc. that can be reproduced is damaged;

5. Other cases determined by Presidential Decree for a safe transaction.

(3) Where a consumer withdraws an offer under paragraph (1), he or she shall send to the installment business operator a written statement indicating his or her intention of the withdrawal within a period referred to in paragraph (1).

(4) The withdrawal of an offer referred to in paragraph (1) shall take effect on the date when the written statement is sent in accordance paragraph (3).

(5) For the purposes of paragraph (1) or (2), if any dispute arises in connection with whether and when a contract was sent, whether and when the provision of the goods, etc. was made, and whether it falls under any subparagraph of paragraph (2), the installment business operator shall have the burden of proof.

(6) With respect to goods, etc. for which a consumer cannot withdraw an offer under paragraphs (2) 2 through 4, the installment business operator shall take measures, such as clearly indicating such fact on the package of the goods, etc. or on other place readily recognizable to the consumer, or providing samples, so that the consumer is not to be hindered in the withdrawal of an offer.

Article 10(Effect of withdrawal of offer) #

(1) Where a consumer has withdrawn an offer under Article 8, he or she shall return the goods, etc. already provided.

(2) Where a consumer has withdrawn an offer under Article 8, an installment business operator (including a person who has received the downpayment or installments of the goods, etc. from the consumer or who has concluded the installment contract with the consumer; the same shall apply hereafter in this Article) shall refund the downpayment and installments already paid within any of the following business days. In such cases, where the installment business operator delays the refund of the down payment and installments of the goods etc. to the consumer, he or she shall also pay the overdue interest calculated by multiplying the rate prescribed by Presidential Decree within the maximum limit of the interest prescribed in the Interest Limitation Act according to the period of delay (hereinafter referred to as "damages for delay"):

1. Where having provided goods, three business days from the date on which he or she received the goods under paragraph (1);

2. Where having provided service, three business days from the date on which he or she received the document concerning withdrawal of the offer under Article 8 (3).

(3) In the case of paragraph (1), if service has already been provided (excluding the right to use a particular facility or to receive a type of service), the installment business operator may not demand the return of the same service that has already been provided.

(4) In the case of an indirect installment contract, where an installment business operator has received a document concerning withdrawal of the offer under Article 8 (3), he or she shall request without delay the credit provider to suspend or cancel the request for installment payment of the goods, etc. In such cases, where the installment business operator has already received the price of the goods, etc. from the credit provider, he or she shall refund it to the credit provider without delay.

(5) Where a credit provider has been asked to suspend or cancel the request for installment payment from an installment business operator as referred to in paragraph (4), he or she shall take necessary measures without delay. In such cases, where a consumer has made an installment payment, the credit provider shall refund it without delay.

(6) Where an installment business operator has delayed making the request referred to in paragraph (4) and caused a consumer to make installment payments to the credit provider, he or she shall pay the consumer damages for delay with respect to the amount that the consumer has paid for the period until the consumer receives the refund.

(7) Where a credit provider has delayed making the refund referred to in paragraph (5), he or she shall pay the consumer damages for delay according to the period of delay; provided, where an installment business operator has delayed making the request referred to in paragraph (4) and caused the credit provider to delay the refund of the installment payment to the consumer, he or she shall pay damages for delay.

(8) Where any dispute arises with a consumer as the consumer withdraws an offer, the installment business operator or the credit provider shall not give any disadvantage to the consumer until the dispute is resolved, for instance, by treating him or her as a person who has failed to meet the obligations within the prescribed period by reason of the refusal of payment of installments.

(9) Where a consumer has withdrawn an offer under Article 8 and the goods, etc. have already been used or partially consumed, the installment business operator may not request the consumer's payment in excess of an amount equivalent to the benefit gained by the consumer by using or partially consuming the goods, etc., or the expenses incurred in providing the goods, etc. as prescribed by Presidential Decree.

(10) Where a consumer has withdrawn an offer under Article 8, the installment business operator shall be liable to pay the expenses incurred in returning the goods, etc. provided and may not request the consumer to pay the penalty or damages.

Article 12(Limitation of amount of damages filed by installment business operator) #

(1) The amount of damages that an installment business operator or a credit provider seeks against a consumer on the ground of the consumer's failure to meet the obligations of making installment payments may not exceed damages for delay equivalent to the amount calculated by multiplying the amount of overdue installment payments by the rate prescribed by Presidential Decree within the maximum limit of the interest prescribed in the Interest Limitation Act.

(2) Where an installment business operator rescinds an installment contract under Article 11 (1), the amount of damages sought against a consumer shall not exceed the sum of the amount provided for in any of the following and the amount of damages for delay provided for in paragraph (1):

1. In cases of restitution, such as the return, etc. of the goods, the sum of the amount of the usual user fee and the expenses normally necessary for the conclusion of the contract and for its performance; provided, if the amount obtained by deducting the value at the time of the return of the goods, etc. from the value of installments is higher than the total of the amount of the user fee and the expenses, then such deducted amount;

2. In cases of failure to perform restitution, such as the return, etc. of the goods, etc., an amount equivalent to the value of installments; provided, if service has been provided, an amount equivalent to the price of the service already provided or the benefit gained by the service;

3. In cases where the goods, etc. have not yet been provided, the expenses normally necessary for the conclusion and performance of the contract.

(3) An installment business operator or a credit provider shall not demand an amount of damages exceeding the amount provided for in paragraph (1) or (2) regardless of its name or form, such as liquidated damages or penalty, etc.

(4) An installment business operator or a credit provider shall, when demanding an amount of damages, endeavor in good faith to minimize the consumer's damage sustained.

Article 16(Consumer's defense) #

(1) Where any of the following events occurs to a consumer, he or she may refuse to pay an installment to an installment business operator:

1. Where the installment contract has not been established or has been invalidated;

2. Where the installment contract has been revoked, rescinded or terminated;

3. Where the whole or part of goods, etc. has not been provided to the consumer by the date of provision of the goods, etc. referred to in Article 6 (1) 2;

4. Where the installment business operator has failed to perform a liability for warranty against defects;

5. Where the purpose of the installment contract cannot be achieved due to the installment business operator's failure to meet his or her obligations;

6. Where the consumer reasonably withdraws the offer under other Acts.

(2) In the case of an indirect installment contract, if any of the events prescribed in any subparagraph of paragraph (1) occurs to a consumer, the consumer may refuse to pay an installment to a credit provider only when the value of installments exceeds the amount prescribed by Presidential Decree after notifying the credit provider of his or her intention to refuse to pay the installment.

(3) The amount of installments which a consumer may refuse to pay to a credit provider pursuant to paragraph (2) is the remaining amount of installment not paid to the credit provider at the time when the consumer refuses to pay the installment.

(4) Where a consumer exercises the right of defense referred to in paragraph (1) in writing, such right of defense shall take effect on the date of sending the written statement.

(5) Where an installment business operator or a credit provider receives the defense of a consumer in writing, he or she shall confirm without day whether the exercise of the right of defense falls under paragraph (1). When such exercise of the right of defense does not fall under paragraph (1), he or she shall notify the consumer in writing of his or her intention not to accept the right of defense of the consumer and the fact that the exercise of the right of defense does not fall under any subparagraph of paragraph (1) by any of the following business days from the date of receiving the defense of the consumer:

1. Five business days for the installment business operator;

2. Seven business days for the credit provider.

(6) Where an installment business operator or a credit provider fails to notify as referred to in paragraph (5), he or she shall be deemed to have accepted the consumer's intention to refuse to make an installment payment.

(7) Where a consumer refuses to make an installment payment under paragraphs (1) through (6) and a dispute arises between an installment business operator or a credit provider and the consumer, such installment business operator or credit provider shall not give any disadvantage to the consumer by treating him or her as a person who has failed to meet obligations by the due date until the dispute is resolved due to his or her refusal to make the installment payment.

Article 18(Registration of business) #

(1) A prepaid installment business operator shall prepare the following documents for registration and shall submit them to the Special Metropolitan City Mayor, a Metropolitan City Mayor, a Metropolitan Autonomous City Mayor, a Do Governor, or a Special Self-Governing Province Governor (hereinafter referred to as "Mayor/Do Governor"), as prescribed by Presidential Decree: <Amended on Jul. 24, 2015>

1. A written application indicating the company name, its address, telephone number, and email address (including business offices and agencies), and the name, resident registration number, address, etc. of the representative;

2. A document certifying that its capital is at least 1.5 billion won;

3. A document certifying that a consumer damage indemnification insurance contract, etc. under Article 27 has been concluded;

4. Other documents necessary for confirming identification of the prepaid installment business operator, as prescribed by Prime Ministerial Decree.

(2) Where registration for a prepaid installment business operator has been completed under paragraph (1), the Mayor/Do Governor shall promptly issue a registration certificate of the prepaid installment business.

(3) Where matters referred to in paragraph (1) 1 through 3 are changed, among those registered under paragraph (1), the prepaid installment business operator shall report such fact to the Mayor/Do Governor, as prescribed by Presidential Decree.

(4) The Mayor/Do Governor shall notify the person who has filed a report on change of whether the report is accepted or the extension of the processing period under statutes or regulations related to processing civil petitions within seven days from the date of receipt of the report under paragraph (3). <Added on Mar. 21, 2023>

(5) Where a prepaid installment business operator suspends or discontinues his or her business or recommences his or her business after suspension of business, he or she shall report such fact to the Mayor/Do Governor, as prescribed by Presidential Decree. In such cases, the Mayor/Do Governor shall, upon receiving a report on business discontinuance, cancel the registration; provided, where a prepaid installment business operator meets requirements for cancellation of registration before filing a report on business discontinuance, his or her registration is deemed to have been cancelled on the date of reporting the discontinuance of business. <Amended on Mar. 21, 2023>

(6) The Fair Trade Commission shall disclose the following matters regarding a prepaid installment business operator, as prescribed by Presidential Decree; provided, the Fair Trade Commission shall not disclose matters regarding management and trade secrets of the prepaid installment business operator that are deemed likely to significantly harm its legitimate interests and matters that are deemed likely to infringe on the privacy or freedom of individuals: <Amended on Mar. 21, 2023>

1. Matters registered under paragraph (1) and matters reported under paragraph (3);

2. Other matters prescribed by Prime Ministerial Decree as deemed necessary by the Fair Trade Commission to establish fair trade order and protect consumers.

(7) Where it is necessary for disclosure under paragraph (6), the Fair Trade Commission may request a prepaid installment business operator to submit the relevant data. In such cases, the prepaid installment business operator shall comply unless there is a compelling reason not to do so. <Amended on Mar. 21, 2023>

Article 22(Succession of status) #

(1) Where a prepaid installment business operator transfers its entire business, merges with another company, or divides the company, the company that acquires the entire business, the company surviving the merger or resulting therefrom, or the company that succeeds to the entire business as a result of the division shall file a report thereon with the Mayor/Do Governor within 15 days from the date of such transfer, merger or division, as prescribed by Presidential Decree. <Amended on Jul. 24, 2015; Mar. 21, 2023>

(2) A prepaid installment business operator that merges with another company, divides the company, or transfers its entire business shall make a public announcement of the following matters by the method prescribed by Prime Ministerial Decree within 14 days from the date prescribed by Presidential Decree: <Added on Jul. 24, 2015; Mar. 21, 2023>

1. The information to be disclosed under Article 18 (6), including the names, addresses, etc. of the any of the following companies:

(a) The merging company and the company surviving, or resulting from, the merger;

(b) The divided company and the company that succeeds to the relevant business entirely as a consequence of the division;

2. The number of prepaid installment contracts transferred through the merger, division, or transfer of entire business and the amount of advances;

3. Terms and conditions of, and the procedure for, the merger, division, or transfer of entire business;

4. Other matters prescribed by Prime Ministerial Decree as those necessary for protecting consumers' rights.

(3) If a company that has filed a report under paragraph (1) falls under any ground for disqualification under Article 20, the Mayor/Do Governor shall not accept the report. <Amended on Mar. 21, 2023>

(4) The Mayor/Do Governor shall notify the person who has filed a report under paragraph (1) of whether the report is accpeted or the extension of the processing period under statutes or regulations related to processing civil petitions within seven days from the date of receipt of the report. <Added on Mar. 21, 2023>

(5) If the report filed under paragraph (1) is accepted, the company that has filed it shall succeed to the status of the prepaid installment business operator from the date of transfer, merger or division. <Added on Mar. 21, 2023>

Article 22-2(Transfer of prepaid installment contracts) #

(1) A prepaid installment business operator who transfers a prepaid installment contract (hereinafter referred to as "transferor prepaid installment business operator") shall make a public announcement of the following matters within 14 days from the date of conclusion of the agreement on the transfer of the prepaid installment contract (hereinafter referred to as "transfer agreement") by the method prescribed by Prime Ministerial Decree: <Amended on Mar. 21, 2023>

1. The information to be disclosed under Article 18 (6), including the names, addresses, etc. of the transferor prepaid installment business operator and the prepaid installment business operator to whom the prepaid installment contract is transferred (hereinafter referred to as "transferee prepaid installment business operator");

2. The number of members involved in the transferred prepaid installment contracts and the amount of advances;

3. Terms and conditions of, and the procedure for, the transfer agreement;

4. Other matters prescribed by Prime Ministerial Decree as those necessary for protecting consumers' rights.

(2) The transferor prepaid installment business operator shall explain the following matters to consumers who have signed a prepaid installment contract within 30 days from the date of conclusion of the transfer agreement by the method prescribed by Prime Ministerial Decree so that the consumers can understand terms and conditions of the transfer agreement and shall obtain consent to the transfer agreement from the consumers within seven days from the date of explanation; provided, a consumer who does not express opposition to the transfer agreement within the specified period shall be deemed to consent to the transfer agreement:

1. The matters specified in paragraph (1);

2. The statement that, if a consumer does not express opposition to the transfer agreement within seven days, the consumer shall be deemed to consent to the transfer agreement.

(3) The transferor prepaid installment business operator shall obtain confirmation from each consumer on the fact that the consumer understands and consents to the terms and conditions explained under the main sentence of paragraph (2) by having the consumer affix his or her signature or seal, by recording relevant conversations by an audio recording system, or by any of the methods specified by Presidential Decree; provided,, in cases of the proviso to paragraph (2), the transferor prepaid installment business operator shall ensure that it can be confirmed that he or she has completed the explanation, etc. under the main sentence of paragraph (2) to relevant consumers by the methods prescribed by Prime Ministerial Decree, such as stating the time and method of his or her contacts with the consumer, the number of times he or she contacted each consumer, etc.

(4) The transferee prepaid installment business operator to whom a prepaid installment contract is transferred shall succeed to the rights and obligations that the transferor prepaid installment business operator has under the contract. The foregoing shall also apply to the assets to be transferred under the relevant transfer agreement.

(5) Where a transfer agreement is made, the assets related to prepaid installment contracts specified by Presidential Decree shall be distributed to the transferor prepaid installment business operator and the transferee prepaid installment business operator, and the ownership of such assets shall be vested in them in accordance with the following standards:

1. The transferor prepaid installment business operator: The amount distributed at the ratio of advances paid by the consumers who do not consent to the transfer of prepaid installment contracts to total advances paid by consumers who signed prepaid installment contracts;

2. The transferee prepaid installment business operator: The amount distributed at the ratio of advances paid by the consumers who consent to the transfer of prepaid installment contracts to total advances paid by consumers who signed prepaid installment contracts.

(6) The transferor prepaid installment business operator and the transferee prepaid installment business operator shall preserve the documents confirmed under paragraph (3) for five years from the day after the end of such period for explaining terms and conditions to consumers and obtaining their consent as specified in the main sentence of paragraph (2) (hereinafter referred to as "day after the end of the period for consent").

(7) The transferee prepaid installment business operator shall submit a report to the relevant Mayor/Do Governor, along with documents evidencing the transfer agreement, by the method prescribed by Presidential Decree within two months from the day after the end of the period for consent.

(8) The Mayor/Do Governor shall notify the person who has filed a report the transfer agreement under paragraph (7) of whether to accept the report or the extension of the processing period under statutes or regulations related to processing civil petitions within five days from the date of receipt of the report. <Added on Mar. 21, 2023>

[This Article Added on Jul. 24, 2015]

Article 23(Provision of information before conclusion of contracts and issuance of contracts due to conclusion of contracts) #

(1) A prepaid installment business operator or a solicitor (hereinafter referred to as "prepaid installment business operator, etc.") shall explain the following matters to each consumer so that the consumer can understand terms and conditions of the prepaid installment contract before signing the contract: <Amended on Jul. 24, 2015>

1. The company name, address, telephone numbers, electronic mail address of the prepaid installment business operator or solicitor (the name of the solicitor, if the solicitor is a natural person) and the name of its representative;

2. Type and details of the goods, etc.;

3. Price of the goods, etc. and method and time of payment thereof;

4. Method and time of provision of the goods, etc.;

5. Down payment;

6. Matters on the specified period for withdrawal of offer and termination of contract, method of exercise and effect and the form which is necessary for exercise of rights for withdrawal of offer and termination of contract, as prescribed by Prime Ministerial Decree;

7. Matters on the settlement of complaints about goods, etc. and disputes between the consumer and the business operator;

8. Matters specified by Presidential Decree with respect to indemnification for consumer damage, including the contract term and a consumer’s damages under the consumer damage indemnification insurance contract, etc. under Article 27 (1), and the person liable for damages under Article 27 (4), etc.;

9. The ratio of the total amount of the reserves set aside under Article 27 (2) out of total advances that the prepaid installment business operator has received from the consumer until the end of the month immediately before the month in which the prepaid installment contract was made;

10. Terms and conditions of prepaid installment transactions;

11. Other matters specified by Presidential Decree as terms and conditions of transactions, which affect consumers' decisions on whether to purchase or matters necessary to remedy any damage suffered by a consumer.

(2) The prepaid installment business operator, etc. shall obtain confirmation from each consumer on the fact that the consumer understands the details explained under paragraph (1) by having the consumer affix his or her signature or seal, by recording relevant conversations by an audio recording system, or by any other methods specified by Presidential Decree. <Added by Act No. 13452, Jul. 24, 2015>

(3) Where a prepaid installment business operator concludes a prepaid installment contract, he or she shall deliver to the relevant consumer a written contract stipulating the matters specified in paragraph (1). <Amended on Jul. 24, 2015>

(4) Paragraphs (1), (2), and (3) shall also apply to the transferee prepaid installment business operator under Article 22-2. In such cases, the transferee prepaid installment business operator shall explain the matters specified in paragraph (1) to each consumer within 30 days from the day after the end of the period for consent and deliver a written contract to the consumer. <Added by Act No. 13452, Jul. 24, 2015>

(5) If a change occurs to any of the matters specified by Presidential Decree as those necessary for the protection of consumers, from among the matters specified in paragraph (1), the prepaid installment business operator shall notify consumers of the change in writing or by other means specified by Presidential Decree. <Added by Act No. 13452, Jul. 24, 2015>

Article 24(Consumer's withdrawal of offer) #

(1) A consumer may withdraw an offer to make a prepaid installment contract within any of the following periods (referring to the period on which parties to a transaction have agreed, if the period on which the parties agreed is longer than the specified periods in the following): <Amended on Jul. 24, 2015>

1. Fourteen days from the date on which he or she received a written contract under Article 23 (3);

2. In any of the following cases, fourteen days from the day on which he or she may withdraw an offer, such as the date on which he or she became aware or may have become aware of the address:

(a) Where he or she has received the contract on which the address, etc. of the prepaid installment business operator is not stated;

(b) Where he or she cannot withdraw the offer within the period referred to in subparagraph 1 due to a reason such as the change, etc. of the address of the prepaid installment business operator;

3. Fourteen days from the date on which he or she became aware or could have become aware of the fact that he or she could withdraw the offer, where the written contract under Article 23 (3) had no stipulation concerning the withdrawal of the offer;

4. Fourteen days from the date on which the prepaid installment business operator's hindrance ceases, where the prepaid installment business operator hindered the consumer from withdrawing an offer;

5. Three months from the date of contract, where he or she has not received the written contract under Article 23 (3).

(2) Where a consumer withdraws an offer under paragraph (1), he or she shall send to the prepaid installment business operator a written statement indicating his or her intention to withdraw the offer within a period referred to in paragraph (1).

(3) The withdrawal of an offer referred to in paragraph (1) shall take effect on the date when a written statement is sent in accordance with paragraph (2).

(4) For the purposes of paragraph (1), if any dispute arises in connection with whether and when a contract was sent, the prepaid installment business operator shall have the burden of proof.

(5) Where a consumer has withdrawn an offer under paragraph (1), the prepaid installment business operator shall refund the down payment and installments already received within three business days from the date of receiving an application for withdrawal of offer referred to in paragraph (2). In such cases, where a prepaid installment business operator delays the refund, he or she shall also refund damages for delay according to the period of delay.

Article 27(Consumer damage indemnification insurance contract, etc.) #

(1) Where a prepaid installment business operator is registered as referred to in Article 18, he or she shall conclude any of the following contracts (hereinafter referred to as "consumer damage indemnification insurance contract, etc.") in order to reserve the amount received in advance from consumers as the consideration for the goods, etc. (hereinafter referred to as "advances") related to prepaid installment contracts: <Amended on May 17, 2010>

1. An insurance contract for indemnification;

2. A debt guarantee contract for debt payment concluded with a bank under the Banking Act in order to indemnify consumers;

3. A deposit contract concluded with an institution prescribed by Presidential Decree (hereinafter referred to as "deposit institution") in order to indemnify consumers;

4. A mutual aid contract concluded with the mutual aid association established under Article 28.

(2) The amount to be reserved by a prepaid installment business operator pursuant to a consumer damage indemnification insurance contract, etc. under paragraph (1) (where two or more contracts referred to in the subparagraphs of paragraph (1) are concluded, the total sum of the amount to be reserved by each contract) and standards for the calculation thereof shall be determined by Presidential Decree within the scope not exceeding 50/100 of the total of the advances.

(3) No one may offset or seize (including provisional seizure) the deposit referred to in paragraph (1) 3, and no prepaid installment business operator may transfer or provide the deposit as security unless otherwise determined by Presidential Decree.

(4) A person who is liable to indemnify consumers pursuant to a consumer damage indemnification insurance contract, etc. (hereinafter referred to as "person liable to indemnify") shall promptly pay such indemnification when any of the following causes for payment arises. Where a person liable to indemnify delays the payment without any good cause, he or she shall pay damages for delay: <Amended on May 17, 2010>

1. Where the prepaid installment business operator discontinues his or her business;

2. Where the prepaid installment business operator is subject to suspension of current account transaction by a bank referred to in the Banking Act;

3. Where registration is cancelled under Article 21 or revoked under Article 40;

4. Other cases prescribed by Presidential Decree in order to indemnify consumers for damages caused by a default, etc. of the prepaid installment business operator.

(5) Where a cause for payment referred to in paragraph (4) arises, the deposit institution shall withdraw the deposit and preferentially pay it to a consumer who has concluded the prepaid installment contract with the prepaid installment business operator concerned. The detailed procedure for and method of the deposit and payment of the deposit, etc. shall be determined by Prime Ministerial Decree.

(6) When a prepaid installment business operator concludes a prepaid installment contract with a consumer, it shall notify the person liable to indemnify of the conclusion of the contract and the details thereof within seven days from the date of conclusion of the contract. <Added by Act No. 13452, Jul. 24, 2015>

(7) Upon receipt of the notice of the conclusion of a contract, etc. from a prepaid installment business operator under paragraph (6), the person liable to indemnify shall issue a certificate of indemnification for consumer damage within 30 days from the date of notice, and further details of the procedure and method for issuing such certificates, the descriptions of the certificates, etc. shall be prescribed by Prime Ministerial Decree. <Amended on Jul. 24, 2015>

(8) The Fair Trade Commission may request a person liable to indemnify to submit data related to reserved advances, where necessary to supervise the indemnification for consumer damage. <Amended on Jul. 24, 2015>

(9) Where the work, etc. performed by a person liable to indemnify does not conform to any Act or subordinate statute, the Fair Trade Commission may order the person to rectify such nonconformity and may request the person to take appropriate measures, if it is necessary in connection with remedies for consumer damage, etc. <Amended on Jul. 24, 2015>

(10) Where a prepaid installment business operator concludes or maintains a consumer damage indemnification insurance contract, etc., it shall not make a false statement in the data submitted with regard to advances, etc. <Amended on Jul. 24, 2015>

(11) Other matters necessary for the management of a consumer damage indemnification insurance contract, etc. shall be prescribed by Presidential Decree. <Amended on Jul. 24, 2015>

(12) When a prepaid installment business operator deposits an amount in the deposit institution or requests the deposit institution to return a deposit, it shall submit a document evidencing an increase or a decrease in advances, as prescribed by Prime Ministerial Decree, and the deposit institution shall return the deposit after verifying the relevant document. <Added by Act No. 13452, Jul. 24, 2015>

Article 34(Prohibited Acts) #

No prepaid installment business operator, etc. shall commit any of the following acts; provided, subparagraphs 7, 9, 13, and 14 shall not apply to solicitors: <Amended on Jul. 24, 2015>

1. To compel the conclusion of a contract or to threaten the other party in order to obstruct the withdrawal of an offer or rescission of a contract;

2. To induce the other party to transact with him or her or to obstruct the withdrawal of an offer or rescission of a contract by notifying any false or exaggerated information or by using any deceptive method;

3. To change his or her address, telephone number, etc. in order to obstruct the withdrawal of an offer or rescission of a contract;

4. To cause damage to the other party by neglecting the status in which necessary human resources or facilities for handling disputes or complaints are insufficient for a considerable period;

5. To claim for the price of goods, etc. despite the absence of an offer by the other party;

6. To compel the conclusion of a contract through telephone, fax, computerized communications, etc. although consumers express their intention not to conclude the contract;

7. To conduct business without concluding a consumer damage indemnification insurance contract, etc.;

8. To make or use a sign indicating the conclusion of a consumer damage indemnification insurance contract, etc. or a sign similar thereto despite his or her not having concluded such contract;

9. To engage in business without setting aside the amount that shall be reserved in accordance with the consumer damage indemnification insurance contract, etc.;

10. To use (including cases of providing to a third party) information on consumers without obtaining consent from consumers or beyond the scope of consent; provided, this shall not apply to any of the following cases:

(a) Where it is unavoidable for the performance of contracts with consumers, such as delivery of goods, etc., as determined by Presidential Decree;

(b) Where it is necessary for the payment of the price following the transactions of goods, etc.;

(c) Where it is necessary to verify the identification of consumers in order to prevent illegal use, as determined by Presidential Decree;

(d) Where any inevitable cause arises under other Acts and subordinate statues.

11. To delay or refuse a disposition without good cause despite consumers' having rescinded the contract;

12. To use fraudulent means or exert force on consumers to collect the price where a dispute arises in connection with the withdrawal of an offer or rescission of a contract;

13. To restrict consumers' transfer or acquisition of goods, etc. provided by him or her without reasonable causes or to impose excessive expenses on such transfer or acquisition;

14. To allow a third party to conduct a prepaid installment business by using his or her name or company name or to lend the certificate of registration of prepaid installment business to a third party;

15. To conclude a prepaid installment contract by a multi-level marketing method defined under subparagraph 5 of Article 2 of the Act on Door-to-Door Sales;

16. To request to sign a prepaid installment contract, taking advantage of a money lending relationship between the parties;

17. To conclude a transfer agreement on part of prepaid installment contracts made with consumers;

18. To withdraw money by a prepaid installment business operator who has concluded a transfer agreement from consumers' deposits, etc. without obtaining consent to the relevant transfer agreement from consumers.

Article 35(Investigation of offenses) #

(1) Where the Fair Trade Commission, a Mayor/Do Governor or the head of a Si/Gun/Gu (referring to an autonomous Gu; hereinafter the same shall apply) deems that a prepaid installment business operator has violated this Act, he or she may conduct a necessary investigation ex officio.

(2) Where the Mayor/Do Governor or the head of a Si/Gun/Gu intends to conduct an investigation under paragraph (1), he or she shall notify the Fair Trade Commission thereof and, where the investigation is likely to be overlapped, the Fair Trade Commission may request the Mayor/Do Governor or the head of a Si/Gun/Gu to suspend the investigation. In such cases, the Mayor/Do Governor or the head of a Si/Gun/Gu who receives such request shall suspend the investigation in the absence of a reasonable cause.

(3) Where the Fair Trade Commission, the Mayor/Do Governor or the head of a Si/Gun/Gu performs an investigation under paragraph (1), he or she shall inform the parties to the relevant case of the results thereof (including the details of the disposition, if he or she intends to make a disposition, such as a corrective order).

(4) Where a prepaid installment business operator is recognized to have violated this Act, anyone may report it to the Fair Trade Commission, a Mayor/Do Governor or the head of a Si/Gun/Gu.

(5) Where five years have passed since the end of violation of this Act by a prepaid installment business operator, the Fair Trade Commission shall neither issue an order for corrective action under this Act nor impose a penalty surcharge against such violation; provided, this shall not apply where the disposition for corrective action or imposition of penalty surcharge is cancelled pursuant to the purpose of the judgment and a new disposition is made pursuant to the reasoning of the judgment.

(6) The Fair Trade Commission may establish an investigative team jointly with the Korea Consumer Agency under Article 33 of the Framework Act on Consumers (hereafter referred to as the "Korea Consumer Agency" in this Article) in order to conduct an investigation under paragraph (1). In such cases, the detailed method of and procedure for establishing the investigative team or conducting investigations, and other necessary matters shall be prescribed by Presidential Decree.

(7) Officers and employees of the Korea Consumer Agency in charge of the relevant duties under paragraph (6) shall be deemed public officials for the purposes of Articles 129 through 132 of the Criminal Act.

Article 40(Suspension of business) #

(1) In any of the following cases, the Fair Trade Commission may order a prepaid installment business operator to suspend all or part of its business operations for a specified period not exceeding one year, as prescribed by Presidential Decree: <Amended on Jul. 24, 2015; Mar. 21, 2023>

1. Where a prepaid installment business operator repeatedly commits a violation beyond the standards prescribed by Presidential Decree or fails to take corrective action despite an order for corrective action under Article 39, in either of the following cases:

(a) Where a prepaid installment business operator fails to make a report in accordance with Article 18 (3) or (5) or makes a false statement in such report;

(b) Where a prepaid installment business operator commits an act prohibited under any provision of subparagraphs 1 through 3, 7 through 9, and 12 of Articles 34;

2. Where the prepaid installment business operator engages in any prohibited act referred to in subparagraphs 1 through 3, 8 or 11 of Article 34.

(2) Where a prepaid installment business operator falls under any of the following cases, the Mayor/Do Governor may cancel the registration of such operator; provided, where he or she falls under subparagraph 1 or 2, the registration shall be cancelled: <Amended on Jul. 24, 2015; Mar. 21, 2023>

1. Where the prepaid installment business operator files for registration under Article 18 (3) by fraud or other improper means;

1-2. Where the prepaid installment business operator no longer meets the requirements under Article 19;

2. Where the prepaid installment business operator has a reason for disqualification under any subparagraph of Article 20;

3. Where the consumer damage indemnification insurance contract, etc. is terminated;

4. Where the prepaid installment business operator conducts business during the period of suspension of business;

5. Where the prepaid installment business operator has been ordered under paragraph (1) to suspend its business operations during the last five years (including cases where penalty surcharges have been imposed in lieu of the suspension of business operations under Article 42).

(3) Where the Mayor/Do Governor intends to cancel registration of a prepaid installment business operator under paragraph (2), he or she shall hold a hearing thereon.

Article 53(Administrative fines) #

(1) Any of the following persons shall be subject to an administrative fine not exceeding 50 million won: <Amended on Jul. 24, 2015; Mar. 21, 2023>

1. A person who makes a false statement in a report filed under Article 18 (3) or (5);

1-2. A person who submits an accounting audit report not prepared by an auditor, in violation of Article 18-2 (1);

2. A person who makes a false statement in a report filed under Article 22 (1) or 22-2 (7);

3. A person who refuses, interferes with, or evades an investigation conducted under Article 81 (2) of the Monopoly Regulation and Fair Trade Act applied mutatis mutandis under Article 47 (2).

(2) Any of the following persons shall be subject to an administrative fine not exceeding 30 million won: <Amended on Jul. 24, 2015; Mar. 21, 2023>

1. A person who fails to file a report under Article 18 (3) or (5);

2. A person who fails to submit data in violation of Article 18 (7) or makes a false statement in such data;

3. A person who fails to file an accounting audit report under Article 18-2 (1);

3-2. A person who discloses an accounting audit report not prepared by an auditor, in violation of Article 18-2 (2);

4. A person who fails to file a report under Article 22 (1) or 22-2 (7);

5. A person who provides an explanation or obtains consent under Article 22-2 (2) by fraud or other improper means;

6. The relevant prepaid installment business operator, if a solicitor violates Article 23 (1) or (2); provided, the foregoing shall not apply if the prepaid installment business operator has not failed to exercise due care and supervision over the relevant business to prevent such violation;

7. A person who provides an explanation or obtains confirmation under Article 23 (1), (2), or (4) by fraud or other improper means;

8. A person who delivers a written contract under Article 23 (3) or (4) by fraud or other improper means;

9. A person who fails to submit a document under Article 27 (12);

10. A person who enters a false statement in the records of transactions of goods, etc. or the details of conclusion of a consumer damage indemnification insurance contract, etc., which shall be provided for consumers' perusal under Article 33;

11. A person who fails to appear without good cause, in violation of Article 81 (1) 1 of the Monopoly Regulation and Fair Trade Act applied mutatis mutandis under Article 47 (2);

12. A person who fails to file a report or submit necessary materials or articles under Article 81 (1) 3 or (6) of the Monopoly Regulation and Fair Trade Act applied mutatis mutandis under Article 47 (2) or who files a false report or submits false materials or articles.

(3) Any of the following persons shall be subject to an administrative fine not exceeding 10 million won: <Amended on Jul. 24, 2015; Dec. 29, 2020; Mar. 21, 2023>

1. A person who fails to disclose an accounting audit report to the public in accordance with Article 18-2 (2);

2. A person who fails to make a public announcement under Article 22 (2) or 22-2 (1) or who makes a false statement in such public announcement;

3. A person who violates Article 22-2 (2) or (3);

4. A person who fails to preserve data in violation of Article 22-2 (6);

5. A person fails to provide an explanation or obtain confirmation in violation of Article 23 (1) or (2);

6. A person who fails to deliver a written contract under Article 23 (3) or (4);

7. A person who fails to inform a consumer of the matters prescribed by Presidential Decree, in violation of Article 23 (5) or 32 (2);

8. A person who fails to refund a down payment, installment payments, or damages for delay, in violation of Article 24 (5);

9. A person who fails to refund the price or damages for delay, or requests an excessive penalty, in violation of Article 25;

9-2. A person who fails to notify consumers of the details prescribed by Prime Ministerial Decree or provides false details, in violation of Article 27-2 (1);

10. A person who fails to continue business related to the withdrawal of an offer, etc. during the period of temporary closure of business or the period of suspension of business operations, in violation of Article 32 (1);

11. A person who fails to allow consumers to peruse the transaction records of goods, etc. or the details of conclusion of a consumer damage indemnification insurance contract, etc. under Article 33;

12. Deleted; <Mar. 21, 2023>

13. Deleted; <Mar. 21, 2023>

14. Deleted. <Mar. 21, 2023>

(4) Any of the following persons shall be subject to an administrative fine not exceeding five million won (including a credit provider, in the case of an indirect installment contract):

1. A person who fails to indicate or makes a false indication, in violation of Article 5;

2. A person who fails to issue a contract under Article 6 (2) or issues a contract giving false indication;

3. A person who fails to issue a written statement under Article 6 (3);

4. A person who receives an installment commission in violation of the ceiling of actual annual rate of an installment commission under Article 7;

5. A person who fails to refund a down payment, installment payments or damages for delay or to take actions necessary for the refund thereof, in violation of Article 10;

6. A person who gives disadvantages to consumers, in violation of Article 10 (8) or 16 (7);

7. A person who receives damages for delay in violation of the maximum limit of the interest rate which is applied at the time of calculating the damages for delay under Article 12 (1);

8. A person who fails to continue business for the withdrawal of an offer, etc. during the period of suspension of business or the discontinuance period of business, in violation of Article 17.

(5) A person who fails to comply with an order issued for the maintenance of order under Article 66 of the Monopoly Regulation and Fair Trade Act applied mutatis mutandis pursuant to Article 47 (1) shall be subject to an administrative fine not exceeding one million won. <Amended on Dec. 29, 2020>

(6) Administrative fines under paragraphs (1) through (3) and (5) shall be imposed and collected by the Fair Trade Commission, a Mayor/Do Governor or the head of a Si/Gun/Gu.

(7) Administrative fines under paragraph (4) shall be imposed and collected by a Special Self-Governing Province Governor, a Special Self-Governing City Mayor or the head of a Si/Gun/Gu. <Amended on Mar. 21, 2023>

(8) Guidelines for imposing administrative fines under paragraphs (1) through (5) shall be prescribed by Presidential Decree.

INSTALLMENT TRANSACTIONS ACT

Article 1(Purpose) #

Article 2(Definitions) #

Article 3(Exclusion from application) #

Article 4(Relationship with other Acts) #

Article 5(Provision of information before conclusion of contract) #

Article 6(Principle of executing installment contract in written form) #

Article 7(Actual rate of installment commission) #

Article 8(Withdrawal of offers) #

Article 9(Notification of withdrawal of offer of indirect installment contract) #

Article 10(Effect of withdrawal of offer) #

Article 11(Rescission of installment contract by installment business operator) #

Article 12(Limitation of amount of damages filed by installment business operator) #

Article 13(Acceleration of consumer’s obligation) #

Article 14(Consumer's payment before due date) #

Article 15(Extinctive prescription of claim for installment payments) #

Article 16(Consumer's defense) #

Article 17(Handling procedures regarding withdrawal of offer during period of suspension of business) #

Article 18(Registration of business) #

Article 18-2(Submission and public disclosure of accounting audit reports) #

Article 19(Capital) #

Article 20(Grounds for disqualification) #

Article 21(Ex officio cancellation of registration) #

Article 22(Succession of status) #

Article 22-2(Transfer of prepaid installment contracts) #

Article 23(Provision of information before conclusion of contracts and issuance of contracts due to conclusion of contracts) #

Article 24(Consumer's withdrawal of offer) #

Article 25(Rescission of prepaid installment contract by consumer) #

Article 26(Rescission of prepaid installment contract by prepaid installment business operator) #

Article 27(Consumer damage indemnification insurance contract, etc.) #

Article 27-2(Obligations of prepaid installment business operators to give notice of advance payment) #

Article 27-3(Enactment of guidelines for consumer protection in prepaid installment transactions) #

Article 28(Establishment of mutual aid association) #

Article 29(Business of mutual aid association) #

Article 30(Articles of association and mutual aid regulations of mutual aid association) #

Article 31(Supervision of mutual aid association) #

Article 32(Business operations for withdrawal of offer during period of temporary closure of business) #

Article 33(Perusal of transaction records) #

Article 34(Prohibited Acts) #

Article 35(Investigation of offenses) #

Article 36(Disclosure of information on illegal Acts) #

Article 37(Reporting and supervision) #

Article 38(Corrective recommendations for offenses) #

Article 39(Corrective action) #

Article 39-2(Cooperation of related agencies) #

Article 40(Suspension of business) #

Article 41(Requests for mediation of dispute arising from consumer damage) #

Article 42(Penalty surcharges) #

Article 42-2(Provisions applicable mutatis mutandis) #

Article 43(Prohibition of contracts detrimental to consumers) #

Article 44(Exclusive jurisdiction) #

Article 45(Registration of trade association) #

Article 46(Entrustment of business affairs) #

Article 47(Application mutatis mutandis of the Monopoly Regulation and Fair Trade Act) #

Article 48(Penalty provisions) #

Article 49(Penalty provisions) #

Article 50(Penalty provisions) #

Article 51(Penalty provisions) #

Article 52(Joint penalty provisions) #

Article 53(Administrative fines) #

Article 54(Special cases concerning application of provisions governing administrative fines) #