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Beware of cancellation penalties when cancelling a contract made via accommodation sharing platforms 2018-02-14

Beware of cancellation penalties when cancelling a contract made via accommodation sharing platforms

- Consumers should carefully check refund policies before booking -

 

    As online platforms of accommodation sharing* have emerged, which enable consumers to gain greater insights into local cultures at low cost, consumer complaints are increasing, so consumers are required to pay special attention when using those accommodation sharing platforms.

 

       * ‘Accommodation sharing’ refers to renting out existing privately-owned idling rooms or houses to travellers, and accommodation sharing platforms are operated by the method in which consumers make a reservation for the lodging facilities of accommodation suppliers registered on online platforms of accommodation sharing.

 

    According to the Korea Consumer Agency (KCA), consumer counselling requests related to accommodation sharing platforms reported to the 1372 Consumer Counselling Center* during the past 4 years(2014~2017) were 194 cases. In particular, the number of counselling requests reported in 2017 was 108, which tripled compared to 36 cases in 2016.

       

       * 1372 Consumer Counseling Center is a nationwide integrated consumer call center (1372, no regional code) operated by the Korea Fair Trade Commission (KFTC), and consumer groups, the KCA, and local governments work together to provide counseling services.

 

    In breaking down the above counselling requests by type of complaint, excessive contract cancellation penalties accounted for the largest portion (137 cases, 70.6%), followed by incomplete contracts including unavailable accommodation booking (34 cases, 17.5%), and unsatisfactory services and poor facility and sanitation conditions (12 cases, 6.2%).

 

[ The Current Status by Type of Complaint]

[Unit: number of case, (%)]

Type

Excessive contract cancellation penalties

Incomplete contracts

Unsatisfactory services & facility and sanitation in poor conditions

Others*

Total

Number of case

(%)

137

(70.6)

34

(17.5)

12

(6.2)

11

(5.7)

194

100.0)

* Loss, theft, safety, etc.

 

    And an analysis of the 194 cases where the addresses of the shared accommodations could be identified, revealed that 130 cases (67.0%) were involved with overseas accommodations, and 64 cases (33.0%) were related to domestic ones.

    Among the 130 cases where the shared accommodation addresses are overseas, Japan (56 cases, 43.1%) showed the largest number of complaints, followed by the U.S. (21 cases, 16.2%), Germany (7 cases, 5.4%), and France (6 cases, 4.6%), and out of 64 complaints against domestic accommodations, complaints regarding accommodations located in Jeju accounted for 23 cases (35.9%), followed by Busan (10 cases, 15.6%) and Seoul (8 cases, 12.5%).

    With regard to the refund policies of accommodation sharing platforms, they are classified into several categories such as General Policy, Strict Policy, etc., and in case of cancellation, the total accommodation fee or 50% of the total accommodation fee may be imposed as a cancellation penalty depending on the remaining days prior to arrival, and therefore, consumers need to carefully check the refund policies and rules before making a contract.

    In particular, service fees* charged by accommodation sharing platforms can be refunded if a contract is cancelled within a certain period of time after payments are made, but in case where a contract is cancelled more than a certain number of times or after making duplicate bookings, they are not refunded. And it has been found that some accommodation sharing platforms do not refund service fees regardless of their refund policies.

     

      * Fees charged by accommodation sharing platforms to cover services for their customers such as searching for accommodations, providing accommodation brokerage services, paying accommodation fees, and claiming and receiving refunds.

 

    The KCA has advised consumers who plan domestic or international travel to accurately check the date and place of their stay when booking accommodations via accommodation sharing platforms make a booking after carefully reading the refund policies and rules of accommodation sharing platforms and accommodations, and keep emails and text messages to prove the cancellation time when they cancel their booking.

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