The nation’s three mobile carriers -- SK Telecom, KT and LG Uplus -- have been found to have cheated customers in marketing what they called “unlimited” data, voice call and text messaging services.
The Fair Trade Commission has found that the services that the three operators claimed to be unlimited were in fact limited.
For instance, the carriers slowed down data speeds of their unlimited LTE data plans when subscribers exceeded the data caps they set.
They also levied additional charges or restricted access to services when users of unlimited voice calls or text messaging plans exceeded the monthly quotas.
As the commission started a probe into their unscrupulous marketing practices, the mobile carriers proposed in October last year that they be allowed to provide compensation to affected customers directly so that the case could be closed without them being punished for the misleading ads.
Recently, the commission and the three carriers agreed on a tentative compensation package. The operators proposed to give out 1- to 2-gigabyte LTE data coupons to the 7.4 million unlimited data customers, and 30 to 60 minutes of free voice calls to 25 million unlimited voice users.
They also offered to refund additional charges they collected from subscribers when they exceeded the voice call and text messaging quotas.
The commission said that if customers accepted the compensation scheme, it would be the first time in Korea for companies to resolve a dispute with customers out of court by compensating them directly.
Previously, the commission imposed fines on the offending companies, while the consumers who suffered damage sought compensation by filing suits.
The commission justified the proposed compensation scheme, on the grounds that, from the consumers’ standpoint, receiving compensation directly from the mobile carriers would be more practical than having to take legal action.
It also noted that the maximum fine that it could impose on each carrier would be just 500 million won ($430,000), an amount that would be nothing more than a slap on the wrist for such large companies.
Yet the compensation packages proposed by the carriers hardly seems sufficient in light of the seriousness of their unethical business practices. If the package is accepted, it would amount to letting the carriers get away with cheating their customers.
It is also unreasonable to allow the carriers to compensate their customers with data coupons and free call time instead of cash, given that many of them do not need extra data or more calling minutes.
The commission needs to toughen punishment for fraudulent marketing practices to stop companies from cheating their customers.
