KOREAN REGULATOR ANNOUNCES NEW GUIDELINES ON USER PROTECTION RELATING TO APP MARKETS AND MOBILE CONTENT
June 28, 2023
The Korea Communications Commission has announced new guidelines to explain and further expand on app market operators’ obligations prescribed under the Telecommunications Business Act.
These obligations mainly concern protecting users in connection to payments and refunds in the use of app markets and mobile content.
App developers, while not expressly subject to the legal provisions, are strongly urged to take similar measures.
On June 21, 2023, the Korea Communications Commission (KCC) published a new set of guidelines, the “Guidelines for User Protection of App Markets and Mobile Content” (Guidelines). The Guidelines explain and further expand on app market operators’ obligations prescribed under Article 22(9) of the Telecommunications Business Act (TBA) and Article 30(9) of the Enforcement Decree of the TBA, which were each newly legislated in 2021 and 2022, respectively.
In detail, this includes app market operators’ obligations to (I) specify payment and refund-related matters in their Terms of Service; (II) notify users of changes to the Terms of Service; (III) handle user complaints regarding payment/refund; and (IV) provide user guidance and support regarding payment/refund when making available payment methods.
While the foregoing legal provisions apply only to app market operators, the Guidelines also explicitly recommend that mobile content providers (i.e., app developers) take similar measures to ensure user protection and include app developers within the scope of future monitoring.
I. SPECIFYING PAYMENT AND REFUND-RELATED MATTERS IN THE TERMS OF SERVICE
An app market operator must specify in its Terms of Service, (i) methods by which users can check information on the app developer and/or user agreements regarding mobile content, and (ii) methods by which users can lodge complaints regarding payment/refund for mobile content (e.g., refund procedures and relevant contact information). App developers who provide paid-for services are recommended to take measures that are similar to the foregoing as well, i.e., include information on payment/refund policies and user compliant methods in the Terms of Service.
II. NOTIFYING USERS OF CHANGES TO THE TERMS OF SERVICE
In case of any changes to the Terms of Service that are disadvantageous to users, an app market operator must notify users of the same at least 30 days in advance by way of notification on the entrance page of the app market or a connected page. App developers are also advised to do the same on their apps.
III. HANDLING USER COMPLAINTS REGARDING PAYMENT/REFUND
Upon receiving a user complaint in relation to payment/refund for mobile content, an app market operator must relay this to the relevant app developer and inform (or have the app developer inform) the user of the outcome of the complaint. Meanwhile, app developers are encouraged to make available their contact information (e.g., email address, phone number, website) on the app market for users to submit such complaints.
IV. PROVIDING USER GUIDANCE AND SUPPORT FOR PAYMENT/REFUND WHEN PROVIDING PAYMENT METHODS
If an app market operator provides app developers with its own in-app payment system for users to use, it must notify certain matters to users prior to actual payment, including the following: (i) the price and whether it is inclusive of VAT; (ii) period of use; (iii) (in case of mobile content that is provided for free in the beginning) whether prices will start being charged later and, if so, when; (iv) refunds and cancellations; and (v) methods to cancel subscriptions. The app market operator must provide app developers with technical means (i.e., a link or button) to implement in-app the procedures through which users can cancel automatic and periodic payments.
If an app developer is providing a separate payment method other than the in-app payment system provided by the app market operator, it is urged to also take the foregoing measures. Further, the app developer is encouraged to provide additional notification of purchase completion after the actual payment and to facilitate purchase cancellations and refunds (i.e., full refund within seven days after payment if the user has not started using the mobile content; pro rata refund for remaining periods in case of cancellation of automatically renewed subscriptions).
The KCC is empowered under the relevant TBA provisions to conduct fact-finding investigations in connection to the obligations listed above and issue corrective orders/recommendations upon finding any violations or shortcomings. The Guidelines expressly list the following 10 items as a checklist for future monitoring and are expected to serve as a more detailed criteria when the KCC evaluates compliance:
(i) Disclosure of the app developer’s phone number;
(ii) Disclosure of the app developer’s email address;
(iii) Availability of the Terms of Service;
(iv) Disclosure of payment/refund policies;
(v) Disclosure of whether prices are inclusive of VAT;
(vi) Support for purchase cancellations and notification of methods thereof;
(vii) In-app support for cancellation of automatic and periodic payments and notification of methods thereof;
(viii) Support for cancellation of subscriptions and notification of methods thereof;
(ix) Notification of purchase completion; and
(x) Notification in case of conversion from free to paid-for mobile content.
Again, while the relevant TBA provisions only apply to app market operators, app developers are explicitly recommended to take similar measures. In particular, the Guidelines state that the KCC will include in its monitoring scope newly released apps, top-ranked apps and apps relating to new tech, and the regulator will share with app market operators lists of app developers that fall short of desired compliance (and who have refused to comply with corrective recommendations). This may lead to rectification measures on the app market level, so app developers are ultimately advised to comply with the above requirements as much as possible.
This update is intended as a summary news report only, and not as advice. For legal advice, please inquire with your contact at Bae, Kim & Lee LLC, or the authors of this legal update.
Jiyeon Park
T 82.2.3404.0655
Daein Kim
T 82.2.3404.1266