Tesla Korea ordered to amend unfair contract terms

19-Aug-2020 Intellasia | KoreaTimes | 6:02 AM Print This Post

US electric vehicle (EV) giant Tesla’s Korean unit has corrected its contract terms that allegedly shifted its responsibility to customers, after the fair trade regulator here ordered it to do so.

The Fair Trade Commission (FTC) said Tuesday that it ordered Tesla’s Korean unit to amend five unfair clauses among the carmaker’s trading terms and conditions.

Though the company’s EVs have been enjoying skyrocketing popularity here, customers have been criticising Tesla for unfair clauses such as responsibility for vehicle damage occurring during delivery.

One of the amended terms originally stated that Tesla Korea would return only 100,000 won ($84.40) of its commission fees in compensation if a vehicle is damaged during the delivery process, as the firm claimed it had no responsibility for accidents or any other damage.

With the revised terms, Tesla Korea will be responsible for all damage so that it will pay compensation if a vehicle is damaged during delivery.

The order was made after several Tesla customers filed complaints with the FTC, claiming the unfair terms and conditions violated local laws that protect consumers’ rights, the agency said.

“The FTC conducted an investigation into Tesla’s contract terms and conditions to prevent possible disadvantages to customers,” the agency said.

It added Tesla Korea corrected its unfair clauses when it was reviewing the clauses. “After receiving customers’ complaints against Tesla on March 24, we were reviewing the trading terms of Tesla and the company abolished such unfair terms on March 27,” the FTC said.

Also, the company is ordered to clarify the reason for any order cancellations. While its previous terms said that the company is able to cancel a vehicle order when it detects a customer is trying to purchase its vehicles for the purpose of resale, Tesla revised the term to say that it can cancel an order when a customer makes an order for the purpose of committing a crime.

The FTC expects ordering Tesla Korea to amend its unfair clauses will help protect customers.

“By correcting the unfair terms and conditions of Tesla, consumers are now able to prevent possible disadvantages and secure their rights institutionally,” Lee Tae-whi, head of the FTC’s terms review department, told reporters during a briefing at the government Complex in Sejong.

With growing attention towards EVs, Tesla has seen explosive growth in the Korean market. According to data by the Korea Automobile Manufacturers Association (KAMA), Tesla Korea had sold 7,080 EVs in the first six months of this year, a whopping 1587.8 percent increase from the same period in 2019.

In June, the company sold 2,830 cars to become the third-largest imported car brand here, following German makers Mercedes-Benz and BMW.



Category: Korea

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