The Fair Trade Commission (FTC) in South Korea has imposed fines on four major entertainment companies for violating consumer protection laws related to e-commerce.

On August 11 KST, the FTC announced that it had issued corrective orders and imposed a total fine of 10.5 million KRW (~$7,700 USD) on the Big 4 K-pop agencies for violations under the 'Electronic Commerce Act' –  Weverse Company (HYBE), YG Plus (YG), SM Brand Marketing (SM), and JYP Three Sixty (JYP).

The companies were found to have set excessively strict conditions for refunds on idol-related merchandise (such as albums and official merchandise), which the FTC deemed as unfair practices. These companies had shortened the legally mandated refund period and imposed unreasonable requirements, such as requiring consumers to film product unboxings to qualify for refunds if items were missing.

Weverse Company was fined 3 million KRW, while SM, YG, and JYP were each fined 2.5 million KRW.

Examples of the violations include SM's policy that any product being returned due to simple change of mind must arrive to their logistics center within seven business days of the original delivery date. However, the law stipulates that consumers have seven days from the date the item was received to decide on a return. Additionally, both SM and JYP required customers to submit claims for defective or incorrect items within seven days of delivery, contrary to the law that allows returns within three months from the date of receipt or 30 days from when the defect is discovered.

Weverse, SM, and JYP also stated that they would not offer compensation for lost items after a certain period (30 days from shipping for SM and JYP, and one month from shipping for Weverse), while the law allows claims within three months of receipt.

Further, Weverse and SM enforced policies that prevented returns if the product packaging was opened or damaged, which is illegal under the law that permits returns even if the packaging is damaged, as long as it was done to check the contents.

SM and JYP also required customers to provide a video recording of the unboxing as evidence in cases of missing items, which contradicts the law that places the burden of proof on the seller, not the consumer.

YG also had restrictive policies for event-related purchases, such as signing events, stating that cancellations or refunds were not allowed after the application period ended. However, according to the law, consumers are still entitled to cancel before the winners of such events are announced, as the opportunity to participate is tied to the purchase.

In response to the FTC's investigation, all four companies voluntarily corrected their policies, meaning the fines that have been imposed are lower than what would have originally been charged.