Unfair Terms and Conditions: FTC Asks Prosecution to Launch Investigation into Airbnb | BusinessKorea

Monday, November 20, 2017

Airbnb and its CEO will be accused of not correcting its strict refund terms and conditions.
Airbnb and its CEO will be accused of not correcting its strict refund terms and conditions.
29 September 2017 - 3:30am
Michael Herh

The Korean Fair Trade Commission will ask the prosecution to launch an investigation into Airbnb because the company did not follow the commission’s order to correct unfair terms and conditions.

The Fair Trade Commission announced on September 28 that Airbnb and its CEO will be accused of not correcting its strict refund terms and conditions. This is the first time that the Fair Trade Commission (FTC) asked the prosecution to look into a foreign company and its representative for failing to comply with its order to correct terms and conditions.

The point in question was a clause that a customer has to pay 50% of accommodation charges even if the customer cancels his or her reservation even seven days prior to the date the customer is planning to check in. The FTC also ordered Airbnd to change a clause which does not return 'brokerage commissions' equivalent to 6% to 12% of accommodation charges so that the commissions except for some cost will be returned to users.

Therefore, Airbnb changed its terms and conditions to refund 100% of accommodation charges if users cancel reservations 30 or more days prior to check-in dates and 50% less than 30 days before dates they check in.

However, Airbnb did not do that overseas. Only Korean consumers knew that the terms of the agreement will be changed in foreign countries as well. Airbnb applied the existing provision (making a 50% refund if canceled seven days before a check-in) to global accommodation service providers." Under these circumstances, when a Korean guest makes a reservation, Airbnd informed the accommodation service provider of stricter terms of Korea and made the provider receive reservations only if the provider agrees to it. "There is concern that damage can be done to a Korean consumer. For example, if an accommodation service provider is notified of revised terms and conditions while knowing current terms and conditions, the accommodation service provider may turn down a Korean consumer’s reservation application.

Moreover, Airbnb agreed with the FTC that it would refund 100% of commissions for its brokerage service that was not refunded. However, in fact, the company issued a condition that it would not refund when a user cancels more than three times a year or in case of double booking. The FTC concluded that this practice could not be regarded as having implemented the corrective order, saying that duplicate reservation conditions among other things could be widely interpreted.



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