According to the Fair Trade Commission (FTC), AirBnB has failed to fully comply with the commission’s request to loosen its refund policy and provide a 100% refund for customers who cancel their reservation up to seven days before their booking date. (Image: Kobiz Media)
SEJONG, Sept. 30 (Korea Bizwire) – The Korea Fair Trade Commission announced on Thursday it will take legal action against AirBnB after the online accommodations giant ignored its demand to comply with a correction order regarding its strict refund policy for South Korean clients.
According to the Fair Trade Commission (FTC), AirBnB has failed to fully comply with the commission’s request to loosen its refund policy and provide a 100% refund for customers who cancel their reservation up to seven days before their booking date.
It is the first time in history the FTC has reported a foreign business to the prosecution for not fulfilling a correction order.
Last November, the FTC took issue with a clause in AirBnB’s refund policy, which states that customers who wish to cancel up to seven days before their booking date are only eligible for a 50 percent refund, as the group saw it to be an excessive amount of compensation for damages.
In addition, the FTC also ordered AirBnB to give back to customers some of the costs withheld as a ‘commission fee,’ which account for 6 to 12 percent of the booking price.
At first, AirBnB appeared to have taken into consideration the FTC’s request, as their refund policy was modified and seemed to offer a full refund up to 30 days before the booking date, and a 50 percent refund for those who cancel their reservation within 30 days.
Later on, however, it was found that the newly adjusted refund policy only appeared to South Korean customers, while the original policy that offers a 50 percent refund for cancellation of bookings within seven days before the booking date continued for hosts from the rest of the world.
As AirBnB only sent another notification to hosts regarding the new refund policy, once South Korean customers booked a room, the FTC expressed concerns over the way the international online accommodation service went about fulfilling their request, which they feared could cause confusion.
“If a host is informed about the previous refund policy and gets another notification when South Korean guests make a reservation, it could encourage people to cancel reservations made by South Koreans,” one official at the FTC said.
Hyunsu Yim (hyunsu@koreabizwire.com)
