Korea tightens guidelines on Netflix, Spotify subscription billing

South Korean drama collection and films on Netflix (File picture, courtesy of Netflix)

South Korea’s antitrust physique is predicted to tighten the reins on the subscription companies of streaming service suppliers resembling Netflix Inc. and Spotify Expertise SA as customers discover it tough to cancel their subscription at any time they need and should pay for it till it’s renewed.

The Korean Truthful Commerce Fee (FTC) despatched examination experiences to 3 over-the-top (OTT) video platforms – Netflix’s Korean affiliate, Wavve and Watcha Inc. – and two music streaming service suppliers – Spotify’s Korean unit and NHN Bugs Corp. – on August 21 as they’re accused of violating the nation’s e-commerce regulation for shopper safety, tech trade insiders mentioned Thursday.

FTC mentioned within the report that the 5 corporations uncared for customers as a result of they didn’t totally present features to terminate subscriptions in the midst of a billing cycle or the businesses didn’t totally inform customers of the rights to take action.

If a consumer subscribes to a service for a month and cancels it earlier than the interval ends, the corporate ought to refund for the remaining interval and inform the consumer of the main points of the refund correctly, added FTC.

The antitrust physique is investigating Korean web large Naver Corp., e-commerce behemoth Coupang Inc. and on-line grocery purchasing platform Kurly Inc. with related claims.

FTC views subscriptions to streaming companies as “recurring transactions” underneath the Door-to-Door Gross sales Act, which could be terminated in the midst of the billing cycle like canceling a health heart membership.

If an organization doesn’t give customers a refund for the rest of the subscription interval, this limits shopper rights assured by gross sales regulation, the regulatory physique famous.

In the meantime, streaming service suppliers argue that it’s unfair to pressure them to allow consumer cancellation in the midst of a subscription interval. The businesses declare that customers can abuse the regulation by binge-watching movies for a day or two and canceling the subscriptions.

If authorities order corporations to permit termination of subscriptions in the midst of a billing cycle, the businesses could increase subscription charges, leading to harming shopper welfare, a expertise trade supply mentioned.

The FTC regulation is predicted to be stricter than the one made three years in the past.

In 2021, the antitrust physique dominated that customers ought to be capable to get a refund in the event that they cancel inside seven days of the billing date if the consumer doesn’t use the service or if there’s a cause for cancellation attributable to an operator the service.

Write to Sul-Gi Lee at surugi@hankyung.com
Jihyun Kim edited this text.