Taxi drivers caught refusing passengers on three occasions will be stripped of their taxi permits, officials said Wednesday, as a part of a government plan to crack down on illegal business practices in the industry.

The so-called “three strike rule” will take effect Thursday, according to the Ministry of Land, Infrastructure and Transport.

Any driver who refuses a passenger will be slapped with a 200,000 won ($185) fine the first time, and a 400,000 won fine and 30 day suspension the second time. Drivers caught turning away passengers three times in two years will have to pay a 600,000 won fine on top of having their permits revoked.

The government will also clamp down on taxi companies.

For example, a company with 100 taxis will be issued a first warning if its drivers have been caught refusing passengers 20 times, resulting in a 60 day operation freeze. After 40 cases, the authorities will issue a second warning and force the company to reduce its number of taxis. After 60 violations, the company will receive a third warning and lose its license to operate.

The number of violations required for each warning will vary in proportion to the size of each company’s taxi fleet.

Officials said the new measure was aimed at reducing the inconveniences caused by taxis’ illegal refusal to accept passengers. Particularly late at night when most buses have ceased to operate, many taxi drivers here cherry-pick their customers to earn the highest profit per ride.

According to numbers provided by Seoul City, about 68,000 passengers were rejected from 2010 to August of last year.

By Yoon Min-sik (minsikyoon@heraldcorp.com)