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Netflix in Korea ordered to change unfair terms of use

South Korea’s antitrust regulator said Wednesday that Netflix would make changes in their terms of use that are deemed unfair, including changing subscription plans and prices without consent, in accordance with instructions it made to the company.


The company’s revised terms of use will take effect starting on Jan. 20. This is the first time the government has ordered such changes to be made by a global over-the-top streaming service.

The Fair Trade Commission also signaled that it would strengthen reviews on other global OTT businesses that will enter the market here.

“The FTC will continue reviewing terms and conditions of both local and foreign companies that will newly enter the OTT market here,” it said in its statement.

The watchdog has previously found a total of six clauses that are deemed arbitrary enough to violate user rights. They included: changing subscription fees without user’s approval; an unclear clause regarding suspending or closing a subscriber’s account; holding subscribers liable for accidents such as hacking; limiting users’ right to seek damages with a waiver clause; allowing the provider to transfer the agreement with subscribers to third parties; and the clause that identifies all other clauses as valid even in cases where a specific provision is held invalid or illegal.

Netflix then proposed revisions to the clauses.

From next Monday, Netflix will have to ask for permission from users when they make changes in their subscription plans and price. Previously, Netflix could change them “from time to time” and apply the changes to subsequent billings without an approval process.

After the revision, users will also be only responsible for activities and faults that happened while they are actually using the accounts. In the past, local users had full responsibility in dealing with their accounts even when their accounts had been breached by a third party.

Netflix will be also responsible for compensating special damages when the company acknowledge its errors or faults. The company’s current terms of use states that users “waive all special, indirect and consequential damages against” the company.

The company’s new terms are also more specific on the conditions for terminating subscriptions.

By Shim Woo-hyun (ws
Korea Herald daum