"Business Suspension for Concealing Flood or Accident History"...Used Car Consumer Protection Measures Introduced

Administrative Actions Imposed for Inspection Errors Regardless of Intent
Mandatory Disclosure of Total Cost in Online Listings
Legislative Amendments to Be Proposed in September; Dedicated Task Force to Be Established

From now on, when advertising a used car on an online platform, the total price, including both the vehicle price and all associated fees, must be displayed. If incorrect information about the vehicle's condition, such as flood damage history, is provided, a business suspension will be imposed regardless of whether the misinformation was intentional.

The Ministry of Land, Infrastructure and Transport announced on August 6 that it will implement measures to protect used car consumers, aiming to improve unfair practices in the used car market.

Vehicles are parked at Jang Anpyeong Used Car Market in Ulsan. Photo by Yonhap News Agency

As part of the consumer protection measures, the ministry decided to introduce a "Transparent Pricing System," which mandates explicit disclosure of both the vehicle price and all fees. This decision is based on the finding that insufficient disclosure of fee information infringes on consumers' right to information.

The ministry also plans to address inadequate inspection records regarding vehicle performance. It will establish detailed guidelines to improve inspection quality, and any inspection errors related to flood or accident history will result in business suspension regardless of intent. This is because existing standards for vehicle condition inspections and penalties for inspection errors are insufficient, and recently, 80% of consumer complaints in the used car sector have stemmed from issues with the condition inspection records.

The liability of sellers to provide warranties for defects will also be strengthened. Since the introduction of performance insurance in 2019, the structure has shifted so that used car dealers and inspectors rely on insurance for defect repairs, which has reduced incentives to improve inspection quality. The insurance premiums passed on to consumers have increased by 2.2 times over the past five years.

Used car dealers and performance inspectors will be required to publicly disclose annual credibility information, such as defect occurrence rates. If, within seven days of purchase, a major component (e.g., the engine) is found to be defective, resulting in repair costs of at least 3 million won and repair times exceeding 30 days, the sales contract can be cancelled.

Fair-trade standards for online "sell my car" platforms will also be established. Recently, some platforms have been restricting small-scale dealers from using their services if the dealers protest against being held responsible for diagnostic errors, a practice considered unfair. The new regulations will prohibit platforms from restricting access for reasons not attributable to the user. Furthermore, if the platform's diagnostic error causes a loss to the owner, the platform will be required to compensate for the actual amount of the loss. Criteria for imposing fines on platform operators will be established, and in addition to city, county, or district heads, the Minister of Land, Infrastructure and Transport will also receive authority for administrative sanctions.

The ministry plans to submit related legislative amendments next month to ensure these measures are implemented as soon as possible. It will also set up a separate task force for further discussion. Minister Kim Yoonduk stated, "We will create a fair and transparent used car market where consumers can conduct transactions with peace of mind and businesses can be evaluated fairly."

This content was produced with the assistance of AI translation services.