A recent court ruling has determined that travel agencies, not payment gateway providers, are responsible for refunding customers affected by the ‘T-Mep default’ incident. This landmark decision impacts thousands of travelers who purchased vacation packages through online shopping malls TMON and WeMakePrice, only to find their trips canceled and their money unreturned. The court’s judgment places the onus of repayment on the travel agencies, even if they themselves did not receive full payment from the platform.
Understanding the T-Mep Default
The ‘T-Mep default’ refers to a situation that arose in 2024 when online shopping platforms TMON and WeMakePrice experienced a payment processing failure. Consumers who bought travel products through these platforms were unable to travel, and the travel agencies that sold these products did not receive their payments. Both consumers and travel agencies were victims of this default, but the legal battle centered on who should bear the financial responsibility for the unfulfilled transactions.
The Seoul Central District Court’s Civil Division 29 (Presiding Judge Ko Seung-il) recently ruled on an initial lawsuit filed by 539 victims of the T-Mep default. The lawsuit sought refunds from travel agencies and payment gateway (PG) companies. The court partially upheld the claims, ordering the travel agencies to refund the affected travelers. The court reasoned that the travel agencies were the direct parties to the contracts with consumers for the travel products. Therefore, they are obligated to provide refunds, even if they did not receive the full sales proceeds from TMON and WeMakePrice.
Travel Agencies Liable for Refunds
The court’s decision mandates that the travel agencies involved must collectively refund approximately 1.357 billion won to the affected travelers. This ruling stems from payment settlement delays involving T-Mep in July 2024. Travel agencies had sold various travel and accommodation products to consumers via T-Mep. However, they failed to receive the settlement payments from T-Mep, which led some agencies to argue that they could not afford to issue refunds to consumers. The court rejected this argument, asserting that the obligation to refund consumers, even in cases of contract cancellation, remains with the travel agency.
Furthermore, the court stated that travel agencies must also prove that the period for contract cancellation had passed or that the travel services had commenced. Some travel agencies had claimed they could not offer refunds because more than seven days had passed since the flight ticket issuance date. However, the court found insufficient evidence to support these claims, particularly regarding the issuance of flight tickets.
Lee Wang-min, a lawyer from Daeryuk Law Firm, commented that the court’s recognition of the travel agencies’ refund liability could serve as a significant reference point for similar future cases.
Payment Gateway Providers Exempt from Liability
In contrast to the travel agencies, the court found payment gateway (PG) providers to be without refund liability. The court’s reasoning was that PG companies merely processed payments made by consumers via credit cards, forwarding the funds to other businesses after deducting their fees. They were not the entities that sold the travel products or provided the travel services themselves.
The core of the legal debate concerning PG companies revolved around whether they qualified as ‘recipients of payment’ under Article 18, Clause 11 of the Electronic Commerce Transactions Act. This clause stipulates that if the party contracting for telecommunications sales and the recipient of payment are different, they can be jointly held responsible for refunds related to contract cancellations. The court determined that the mere passage of payment funds through a PG company’s account did not make them a ‘recipient of payment’ in the ultimate sense.
The court concluded that PG companies’ role was limited to facilitating and settling transactions, not to ultimately receiving or managing the funds. Ahn Seo-yeon, a lawyer from Rin Law Firm, explained, “The court viewed that PG companies are not directly liable for refunds to consumers because they are neither parties to the sales contract nor the entities that ultimately receive or manage the funds.”
Precedent and Application to T-Mep Default
This ruling aligns with previous legal precedents where PG companies were not held liable solely for processing payments. For instance, in a 2014 인천 District Court case involving undelivered goods purchased from an internet social commerce site, the PG company’s refund liability was not recognized. The court reasoned that the PG company had only forwarded the payment and did not ultimately receive or manage the funds from the merchant.
Social commerce, a model where specific products are sold at drastically reduced prices when a certain number of buyers gather, was a prominent business model for companies like TMON and WeMakePrice. Similarly, in a May 2024 case at the Seoul Central District Court concerning voice phishing fraud where funds passed through a PG company’s virtual account, the court did not accept claims for unjust enrichment against the PG company. The reasoning was that while the PG company provided virtual accounts and processed settlements, the actual funds were transferred to other parties, not retained by the PG company.
Hyun Il, a representative lawyer from Shin & Hyun Law Group, stated, “Previous precedents have not recognized the refund liability of PG companies that do not ultimately receive payments. This ruling applies that standard to the T-Mep default situation, differentiating the responsibilities of travel agencies and PG companies.”
Travel Industry’s Response and Future Lawsuits
The travel industry is reportedly receiving this ruling with apprehension. Travel agencies are now obligated to refund consumers even though they did not receive their payments from T-Mep, effectively making them victims of non-payment themselves. A representative from Norang Pungseon, a travel agency, stated, “Sales payments were not settled normally, and travel agencies also suffered direct financial damage. Norang Pungseon will continue to prioritize customer protection and faithfully participate in related procedures.” The agency indicated that they would review the court’s decision thoroughly before deciding whether to appeal.
This specific lawsuit is part of a larger collective action involving approximately 3,000 victims who purchased travel and accommodation products through T-Mep. These victims are seeking a total of 7.7 billion won in refunds from travel agencies and PG companies. Five similar lawsuits have been filed, and this ruling represents the first instance of a preliminary judgment.
If this court decision is finalized, it could lead to travel agencies being required to refund customers in the remaining collective lawsuits as well. However, the final outcome for each individual consumer may vary depending on the specifics of their transaction, such as the extent to which travel services were provided.
