Two Pre-paid Installment Firms Close in Q2; FTC Warns Consumers on Business Stability

The number of companies operating in South Korea's pre-paid installment transaction sector has decreased, with two firms applying for closure in the second quarter of this year.

According to the Fair Trade Commission (FTC), as of the end of last month, 74 companies remain in operation. This reduction follows applications for closure from Daenok Welfare Business Group and Agape Life, bringing the total down from 76 in the previous quarter.

In addition to the closures, the FTC noted that eight companies reported changes to key information, such as their capital, trade names, and representatives. These changes involved a total of 10 items.

The FTC issued a warning to consumers, advising caution regarding businesses that frequently change their names or addresses, as these could indicate financial instability or a risk of business suspension. It is crucial for consumers to verify the company's business status and whether they have secured consumer damage compensation insurance before entering into contracts.

For those who have already contracted with pre-paid installment service providers, such as funeral services or package tour products, and the company subsequently goes bankrupt, compensation can be sought through the designated insurance contract institutions. Typically, 50% of the prepaid amount can be recovered. However, if the company did not have insurance, recouping payments upon bankruptcy becomes difficult.

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Businesses that frequently change their names and addresses carry a risk of insolvency or business suspension, so caution is advised when transacting with them.