Korea Consumer Agency survey finds numerous cases of harm from unperformed or delayed defect repairs
Consumers need to carefully verify contractor information and the defect warranty period
As people have spent more time at home since COVID-19, demand for home interior renovation has been rising. However, a survey by the Korea Consumer Agency (President Jang Deok-jin) found that consumer harm—such as the failure to perform or delays in defect repairs after interior construction—is occurring frequently, indicating a need for improvement.
Over the past four years (2018–2021), a total of 1,752 requests for consumer redress related to interior work were filed with the Korea Consumer Agency. In particular, 568 cases were filed in 2021, a 37.9% increase from the previous year (412 cases).
By type of consumer harm, “failure to perform or delay in defect repairs” was the most common at 24.5% (429 cases), followed by “defects in material quality, construction, and finishing” at 14.2% (249 cases) and “claims for damages due to defective construction” at 8.8% (155 cases). As for project cost, the majority—77.1% (1,350 cases)—were under 15 million won, but projects of 15 million won or more, which fall under the construction business registration requirement, also accounted for 17.5% (306 cases).
Consumers often commission work by placing their trust in an interior brand’s head office or in a construction brokerage platform. However, an examination of who bears responsibility for repairing construction defects found that two interior brands (LX Hausys, Hyundai L&C) stated that the head office bears no repair responsibility for construction defects arising from contracts signed with ordinary dealerships rather than directly operated stores. The other two companies (KCC Glass, Hanssem) indicated that, even in the case of an ordinary dealership contract, the head office also bears defect repair responsibility when the work uses the head office’s products and its standard contract form, or when the head office participates as a construction supervisor. Consumers therefore need to carefully examine the type of construction dealership (contractor) and whether the brand’s head office bears defect repair responsibility when signing a contract.
Meanwhile, all four platform companies specified that responsibility for interior construction lies with the contractor and that the platform, as an intermediary for mail-order sales, bears no responsibility.
Regarding the contractor’s defect warranty period, six companies specified “one year or more.” However, in the case of two platform companies (Soomgo, House App), some listed contractors indicated a period of “less than one year” or did not specify a period at all, creating the potential for disputes should defects arise.
The interior market generally has many small-scale sole proprietors and low information transparency, making it difficult to resolve consumer harm. Accordingly, the relevant law requires businesses undertaking projects of 15 million won or more to register as a construction business by meeting certain technical capability and capital requirements, and to join a mutual aid association that guarantees liabilities such as damages and defect repair warranties.
This survey found that only two businesses (Ohou, Zipdoc) informed consumers that, for projects of 15 million won or more, they must proceed with a registered construction business to receive legal protection, and they indicated for each contractor whether it was a registered construction business. Meanwhile, monitoring of the actual construction cases posted on the websites of the surveyed businesses confirmed instances in which unregistered construction businesses carried out projects of 15 million won or more, which was pointed out as a problem.
To prevent construction disputes, the use of the “Standard Contract Form for Interior Construction and Window/Door Work” enacted by the Fair Trade Commission is recommended when signing a contract. However, only one of the four platform companies (Ohou) provided guidance on preparing the FTC standard contract form.
In addition, the proprietary contract forms of some interior brand businesses were unfavorable to consumers in their provisions on construction delays and contract cancellation—for example, imposing late-payment penalties when consumers are behind on construction payments while omitting any compensation clause for the business’s delay in completion, or charging 50% of the total payment as a cancellation penalty even when the consumer cancels the contract three days before construction begins.
Meanwhile, two platform companies (Soomgo, Zipdoc) operated a payment escrow system, in which they receive and hold the construction payment directly and disburse it to the contractor only after the consumer’s consent, using it as a safeguard against consumer harm such as defective construction.
Based on the results of this survey, the Korea Consumer Agency plans to recommend that businesses ▲strengthen disclosure of whether contractors are registered construction businesses, ▲expand use of the standard contract form for interior construction and window/door work, and ▲introduce a payment escrow system. It also urged consumers to ▲verify contractor information and the defect warranty period, ▲choose a registered construction business for projects of 15 million won or more, and ▲request the use of the standard contract form.