Korea's Fair Trade Commission (FTC) revised its Consumer Protection Guidelines for Prepaid Installment Transactions, effective October 23, 2026. The guidance concerns how businesses including prepaid funeral-service providers manage customer money paid in advance and their internal controls. It is not a promise to return every customer's entire contribution immediately on cancellation. The distinction matters when reading the FTC's announcement and the attached comparison of the old and revised text.
Why the guidance addresses customer prepayments
Providers need funds to deliver promised goods or services in the future and to pay cancellation refunds under their contracts. The FTC says they should balance stability, liquidity and returns so the funds needed for those obligations do not run short. This is not simply a direction to maximize investment returns: the provider also needs to consider whether it can obtain funds when obligations fall due. The announcement does not offer customers a particular investment return.
Before the revision, the guideline comprised “General Matters” on interpreting the law and “Recommendations” aimed at sound trading practices and consumer protection. It now adds a separate “Precautions” part about managing prepayments. Read that part as describing risks and pre-transaction scrutiny, not as a blanket statutory prohibition on every high-risk investment.
High-risk investments and dealings with controlling shareholders
The official Korean PDF's old-versus-new comparison identifies excessive investment in derivatives, virtual assets or leveraged financial products when a provider knows there is a very high risk of losing principal. It calls for sufficient examination of a transaction's size, terms and recoverability so that financial soundness or the ability to fulfil consumer contracts is not impaired. It neither categorically bans every investment in these assets nor reports a loss at a specific provider.
A provider can also be exposed when it guarantees a controlling shareholder's or related party's debt or provides collateral: it may have to meet that obligation or lose the collateral if the other party defaults. Transactions in funds, receivables, real estate, goods or services on unusual terms that confer excessive benefits on such parties are another concern. The FTC's illustrations include buying an affiliate's shares above market value or transferring real estate below market value. They illustrate the risk; the release does not identify these illustrations as newly discovered misconduct by a named company.
The internal rules and the KRW 100 billion threshold
Providers are directed to prepare prepayment-management rules covering their general approach, eligible assets, investment review and risk-management procedures. A document with another name, such as asset-management rules, can serve this purpose. They should also prepare a plan for each financial year or comparable period, report it to the board, and include liquidity management, investment and risk-management matters. These are tools for the provider's own decisions, not a statement of each customer's refund.
A provider whose prepayments at the end of the preceding financial year total at least KRW 100 billion is directed to establish and operate a prepayment-management review committee. This threshold concerns the provider's aggregate funds at that reference date, not one customer's payments. The multi-member committee reviews or decides on establishing or changing rules and plans and on investment decisions. When that committee reviews related-party dealings or high-risk investments, the guideline calls for opinions from personnel of statutory payment-obligation institutions, such as mutual-aid associations or banks, and outside accounting or finance specialists. It does not say every provider must have this committee or that every investment requires outside opinions.
If you are considering cancellation
Separate the provider's fund management from your own refund calculation. Compare your contract, applicable terms and the provider's refund calculation. Check the product and payment history and ask the provider about any calculation criteria you do not understand. This is a practical reading checklist, not a new FTC registration or claim procedure. The release does not set a universal individual refund figure, payment date or immediate full-refund right.
Also separate the new rules from proof of compliance by a particular provider. A committee threshold and risk-management procedures do not themselves certify that a named business has implemented them effectively or preserved every customer's money without loss. The FTC says it plans to encourage compliance through meetings and similar efforts; this announcement is not an assessment of every provider's finances.
Do not mistake the effective date for a consumer application window. The source identifies an October 23, 2026 press time of 10:00 a.m. and an effective date of October 23, 2026. It does not substantiate a new consumer registration period or filing deadline. If a separate notice lists dates, check that notice's scope and timing rather than treating the guideline's effective date as its deadline.
In brief
The revision addresses provider management of prepayments and internal controls, including pre-transaction risk review and a size-based committee threshold. It is not an automatic full-refund scheme, and the FTC release alone cannot determine your individual entitlement.
Also on Naver Blog
A Korean companion article is available at Life Mokcha's Naver post.
About the Author
Life Mokcha's editor, “Mokcha Keeper,” checks original public-agency notices and separates provider-level rules from an individual's contract rights.
