South Korean Regulator Fines Kakao Corp for Unfair Business Practices in Music Streaming Service

SEOUL – South Korea's Fair Trade Commission (FTC) has imposed a fine of 98 million won (US$73,200) on Kakao Corp, a prominent technology company, for its failure in adequately communicating the terms of unsubscribing from its music streaming service. The regulatory decision was announced on Sunday.

According to Yonhap News Agency, Kakao Corp, which operates Melon, a major music streaming platform in the country, neglected to inform its users about the possibility of receiving a partial refund when cancelling their subscription plans. This oversight was identified as a significant issue by the commission. The FTC's investigation revealed that Kakao treated all unsubscribe requests as "general termination," which led to customers not receiving any refund while they continued to have access to the service for the remainder of the subscription period.

The FTC condemned this practice as a "deceptive tactic," stating that Kakao did not effectively communicate with users regarding their options for unsubscribing. The commission highlighted that understanding and respecting consumer preferences is crucial, and failing to do so violates fair business practices.

In response to the ruling, Kakao Entertainment Corp., the entertainment division of Kakao, challenged the FTC's findings, arguing that the decision lacked substantial evidence. The company asserted that it offers an early termination option for its services through both online platforms and consumer centers. Kakao Entertainment also stated that there is no conclusive proof to suggest that users were forced into choosing a specific cancellation method.

The FTC, in its statement, emphasized its commitment to rigorously addressing unlawful activities. The commission expressed its intention to establish fair business orders that align with consumer needs, signaling ongoing scrutiny of business practices in the digital services sector.

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