FTC raises no-show fees: Restaurants can charge up to 40%, wedding venues up to 70% for same-day cancellations

From now on, customers who make reservations at omakase or fine dining restaurants and fail to show up will face a cancellation fee rising sharply from 10 percent to 40 percent of the total cost. For wedding venues, same-day cancellations could incur penalties of up to 70 percent of the total booking amount.

The Fair Trade Commission (FTC) announced on October 22 that it has drafted a revision to the Consumer Dispute Resolution Standards, which will be open for administrative notice and public comment from October 22 to November 11.

The Consumer Dispute Resolution Standards serve as guidelines recommending settlements when disputes arise between businesses and consumers.

To reduce the burden on small business owners facing so-called “no-shows”, the FTC decided to raise the maximum cancellation penalties in the food service industry.

Restaurants where a no-show can lead to significant loss, such as omakase or fine dining establishments that rely heavily on reservations and may need to discard fresh ingredients, will be classified as “reservation-based restaurants.” For these establishments, cancellation fees can now be set at up to 40 percent of the total bill, up from the previous limit of 10 percent.

For regular restaurants, cancellation fees can be set at up to 20 percent of the total cost.

The new rules also apply to bulk orders, such as 100 rolls of gimbap, allowing cancellation fees and deposits to be determined under the same standards as reservation-based restaurants. However, this only applies if the restaurant informed the customer of the deposit and cancellation fee in advance. Without prior notice, even large orders are treated as regular restaurant bookings.

If a restaurant collects a deposit that exceeds the cancellation fee, it is obligated to return the difference to the customer. In addition, any policy that treats late arrivals as no-shows must be clearly communicated to the customer in advance to be valid.

Wedding venue cancellation fees will now be tiered according to the timing of the cancellation. Under the current rules, cancellations made from 29 days before the wedding up to the day of the event can incur a penalty of up to 35 percent of the total cost. The FTC has revised the standards so that, going forward: cancellations made 29 to 10 days before the wedding will be subject to a 40-percent fee, cancellations 9 to 1 day before will incur a 50-percent fee, and same-day cancellations will carry a 70-percent penalty.

Regarding accommodation bookings, the standards now explicitly state that free cancellations are allowed not only when a natural disaster occurs at the accommodation site but also if such an event occurs along the route from the departure location to the accommodation.

For overseas travel bookings, cancellations will be allowed without penalty in cases where the government issues orders. The FTC clarified that such orders refer specifically to Level 3 (Travel Advisory) and Level 4 (Travel Ban) alerts issued by the Ministry of Foreign Affairs.

※This article was translated by an AI tool and edited by a professional translator.