Controversy over accommodation platform ‘cancellation fee’ continues… It spread into a legal battle

Among applications for damage relief related to the use of accommodation facilities, 75.8% complained about ‘penalties’
Daeryun Law Firm: “Platform tyranny, consumer protection necessary”

Recently, the number of cases of travelers being denied refunds while booking and canceling accommodations through online accommodation platforms has been increasing. However, it is pointed out that the lodging establishment is passing responsibility to the platform, and the platform is only adhering to a unilateral ‘no refund’ policy, which is only increasing the damage to consumers.

According to data released by the Korea Consumer Agency, there were a total of 4,118 applications for consumer damage relief related to the use of accommodation facilities received over the three years from 2021. Looking at the detailed reasons for application, complaints about penalties arising from contract cancellation were the highest at 78.5% (3,234 cases).

There were not many cases where agreements were reached to recover damages, such as refunds, compensation, or contract cancellation. The average agreement rate of the seven major lodging platforms was 64.8%, but Booking.com had the lowest at 39.6%. Yanolja and Timon also recorded low agreement rates of 58% and 43.8%, respectively. Half of the consumers who used the platform did not receive proper damage relief.

In fact, many dissatisfied posts surrounding cancellation fees are appearing in online communities. Mr. A, who said he lost hundreds of thousands of won in lodging expenses, said in a post, “My travel itinerary changed, so I logged back into the platform a few hours after payment, but the cancellation column was blocked.” He added, “Even when I contacted customer service, the only response was that they could not help, and I was embarrassed to learn about the cancellation policy within 10 minutes later.”

The legal battle over cancellation fees also began in earnest. On the 2nd, the Seoul Central District Court held the first hearing of the lawsuit filed by consumers against the lodging platform Yanolja for the return of unfair profits.

Previously, Yanolja faced a problem because it did not refund accommodation fees due to internal regulations even though consumers who reserved special products requested cancellation within 10 minutes. Accordingly, consumers filed a class action lawsuit against Yanolja.

On this day, the two sides had sharply conflicting opinions regarding violations of the Electronic Commerce Act and the Terms and Conditions Act.

According to Article 17 of the Electronic Commerce Act, regulations related to withdrawal of subscription, consumers who purchase goods from a mail order seller can withdraw their subscription within a certain period of time. Additionally, in accordance with Article 6 of the Terms and Conditions Act, provisions that are unfairly disadvantageous to the customer are presumed to have lost fairness and are invalidated.

The consumer side, the plaintiff, argued that “Yanolja is a mail-order intermediary, which is a mail-order seller,” and that it is “subject to Article 17 of the Electronic Commerce Act.”

However, Yanolja refuted, saying, “We are only an intermediary, not a mail order seller, so we cannot be subject to the law.” Since it is not subject to regulation laws, there is no responsibility for refunds.

Both sides also confronted each other regarding the ‘refund policy within 10 minutes’. Yanolja emphasized, “This is a part that has been notified to the consumer in advance and has been agreed to,” and “In principle, waiving the cancellation fee only for non-refundable products if canceled within 10 minutes is a provision that takes consumer convenience into consideration.”

Accordingly, the consumer side emphasized, “It is difficult to see it as a benefit because it is nothing more than selling products that were not reserved until one day before the accommodation date by misleading consumers,” and added, “Given that the lodging industry is an industry where rooms can be used immediately on the same day when they are vacant, it does not fall under the exception rule that restricts consumers’ exercise of the right to cancel their subscription.”

It was confirmed that the court proposed an agreement at the date and proposed returning more than half of the lodging expenses to Yanolja. However, both sides did not accept this, so the trial was moved to the next date.

Attorney Kim Jin-woo of Daeryun Law Firm (Limited), the consumer's legal representative, said, "Situations often arise where consumers do not receive a refund of accommodation fees ranging from as little as 100,000 won to as much as 1 million won due to a momentary wrong decision. As the main purpose of the Electronic Commerce Act is to protect consumers, we ask the court to make a wise decision to prevent any more unfair consumers."

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