South Korea’s antitrust agency Fair Trade Commission (FTC) took actions to prosecute global home-sharing giant Airbnb Inc. for ignoring its order to change its strict cancellation policy.
The Fair Trade Commission (FTC) said on Thursday that it will ask the country’s prosecution to investigate Airbnb and Eoin Hession, director of Airbnb Ireland, for failing to comply with its order to improve unfair terms of its cancellation and non-refundable service fee policy. It would be the first time for the Korean antitrust watchdog to ask the prosecution to probe a foreign entity for neglecting its administrative order.
Airbnb currently has strict, moderate or flexible cancellation policy standards that its hosts can choose, and the FTC has raised issue with terms of the strict cancellation policy, which gives only a 50 percent refund to customer if a reservation is cancelled seven days or more before a stay.
In November last year, the FTC ordered the global room-sharing operator to correct the clause of its strict cancellation policy as well as the non-refundable service fee, which is priced at 6 to 12 percent of the total charge.
Since the order was made, the service provider has revised its terms to allow Korean Airbnb users to get a full refund for cancellation made 30 days or more before stay and a 50 percent refund for those made within 30 days of the stay under the strict cancellation policy. Also, it fixed the non-refundable service fee policy to make it fully refundable for up to three times a year.
But the FTC has not been satisfied with the changes because the revised term is informed only to Korean customers and remains hidden for foreign hosts until a Korean guest makes a reservation. The FTC viewed it would make foreign hosts discriminate against Korean customers, leading them to reject reservation request upon encountering a different policy.
Moreover, the FTC argued that Airbnb’s new terms to make a full refund of its service fee under certain conditions - refunds up to three times a year or no refund for double bookings - limit consumers’ choice.
The FTC said that it still finds Airbnb’s revised terms of its strict cancellation policy “illegal” and the company has not consulted with the agency regarding its operational policy.
By Lee Seung-yoon
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]