Qoo10 platform payment vendors refuse refunds for vacations, gift cards

Supplies and payment gateways on TMON and WeMakePrice are butting heads over the responsibility to refund customers who bought travel packages and gift cards.

A customer participates in a protest of victims demanding refunds for items bought through credit cards or payment gateways on Qoo10-owned platforms TMON and WeMakePrice. The text reads: "We demand fast refunds. Credit card companies and payment gateways are shifting the blame. Is it our fault for booking our first-ever vacations?" [YONHAP]

Suppliers and payment gateways on TMON and WeMakePrice are playing hot potato with refunds owed to customers who purchased travel services or gift cards on the two imperiled e-commerce platforms.

Payment gateways and credit card companies have started issuing refunds for ordered products from Thursday, but not for customers who have had their travel plans abruptly canceled or gift cards nullified after the two Qoo10-owned marketplaces failed to pay their sellers. The payment gateway providers recently informed the financial authorities that vacation packages, such as airline tickets and accommodation bookings, as well as gift cards sold on TMON and WeMakePrice are not eligible for refunds.

Under the current law, payment gateways are required to process refunds for customers who ask for reimbursement for products or services that have not been delivered. The Financial Supervisory Service has requested payment gateways to process refunds on these grounds.

The problem lies with vacation packages and gift cards. A security code that allows gift cards to be used like money online is sent to purchasers on TMON and WeMakePrice. Payment gateways argue that by providing the number, the gift card was delivered to the user even if it was not used.

The payment service providers essentially argue that gift card businesses such as Happymoney are responsible for issuing refunds. But as Happymoney’s issuer, Happy Money Inc., has practically announced a corporate default, getting a refund is not likely to be easy.

Park Hyeon-min, the representative for a group of Happymoney gift card customers, speaks at a hearing held at the National Assembly in western Seoul on Monday. Happy Money Inc. has halted refunds for the largely unusable gift cards. [NEWS1]

At least 53 billion ($39 million) worth of Happymoney gift cards that are currently largely unusable and nonrefundable were sold on TMON and WeMakePrice, according to financial authorities. The gift cards have not been accepted as payments on major platforms such as Naver Pay, Google and Payco from July 23. Happy Money apologized for the “delays in refunds” in a notice on its website, saying it also was a victim as it was “unclear if all earnings would be paid from TMON as the company had applied for receivership.”

In the case of vacation packages, payment gateways said travel agencies should be responsible for refunds as the confirmed dates for trips mean the purchase contracts have already been completed. This applies even to trips that have not started, according to the middlemen. Travel agencies, on the other hand, are saying they cannot provide full reimbursements or send customers on the vacations as planned.

“There is no precedent for the [current] exceptional situation, so it must be determined who should be responsible for the refunds,” a source at a financial regulatory body told the JoongAng Ilbo, an affiliate of the Korea JoongAng Daily.

“We have been asking travel agencies to cooperate in shouldering some of the refund costs through the Ministry of Culture, Sports and Tourism,” the source added.

Protesters gathered in front of Qoo10's headquarters in Gangnam District, southern Seoul in late July demanding action from the company and its subsidiaries TMON and WeMakePrice as they continue to delay payments to their sellers. The two e-commerce platforms' application for a restructuring program was approved by a court on Friday. [NEWS1]

As of 1 p.m. on Sunday, 4,063 cases have been filed with the Korea Consumer Agency for a collective dispute settlement by customers who purchased travel services such as vacation packages, accommodation reservations or plane tickets.

The agency will receive applications for the settlement until Friday, then start the process for the collective dispute settlement for travel services first. It will take a long time, however, to determine if and how the refunds will be processed, as who should be subject to reimbursement is currently contested.

Customers of TMON and WeMakePrice have had wildly different experiences with requesting refunds depending on which payment method they used. Mobile wallet and payment systems including Naver Pay and Kakao Pay have been issuing refunds even for travel services. The two firms told financial authorities they would prioritize reimbursing customers even at a loss.

Credit card users, however, haven’t been so lucky. Even those who paid in cash are also in a tricky situation. As such payments were not processed through a middleman such as credit card companies, payment gateways or mobile systems, there is no agency to take responsibility for refunding such transactions.

BY JEONG JIN-HO, KIM JU-YEON [kim.juyeon2@joongang.co.kr]