The July closure of Agape Life, a funeral service provider that operated mainly in Busan, has left about 10,000 subscribers scrambling to recover their payments. The company had been in business since 2010, selling prepaid travel packages alongside funeral service plans. Consumers signed up for packages worth 2.4 million to 4.8 million won and paid monthly installments, but the shutdown has left it unclear whether they will get their money back. Of the 11.2 billion won in prepayments collected, estimated losses alone reach about 4.5 billion won. With prepayments collected from consumers by funeral service firms nationwide exceeding 11 trillion won, critics say the system for compensating consumers after a closure falls short.
The 22 funeral service companies that shut down or had their registrations revoked over the five years through March this year held a combined 566.17 billion won in prepayments, according to data obtained from the Fair Trade Commission by the office of Rep. Park Hong-bae of the Democratic Party of Korea, a member of the National Assembly's National Policy Committee, released on the 12th. Prepayments are money consumers pay in advance to use funeral services. Funeral service companies are required to safeguard at least 50% of such prepayments through bank deposits or payment guarantees so that consumers can recover part of their money even if the company folds.
Yet four of the 22 companies that closed or lost their registrations failed to meet even that statutory threshold, meaning the minimum safeguard designed to protect consumers was not properly observed. Critics also say penalties for violating the prepayment safeguard requirement are too weak. Of 12 related violations since 2021, six resulted only in warnings.
Compounding the problem, the market where such losses can occur is expanding rapidly. The number of subscribers to prepaid travel packages rose about 3.9-fold to 236,000 in March 2026 from 60,000 in 2023, according to the commission. Over the same period, prepayments tied to travel packages swelled to 111.8 billion won from 9.4 billion won. Including prepaid funeral service plans, prepayments across the market topped 11 trillion won as of March this year.
Oversight, however, has not kept pace with that growth. The commission has never separately checked whether companies comply with consumer protection guidelines for prepaid travel packages, and it has not conducted a survey of the market, according to the data. That points to weak monitoring not only of compensation after closures but also of advance checks on the potential for consumer harm.
The window for filing compensation claims and the process for notifying consumers have also been flagged for improvement. As of May last year, 6.6 billion won in compensation that mutual aid associations were due to pay out since 2020 had gone unpaid because the statute of limitations had expired. Under that rule, the right to claim compensation lapses if it is not exercised within a set period. Consumers hurt by a closure may fail to recover their money even with the statutory safeguard system in place if they do not learn of the compensation process in time or miss the filing deadline. Some argue the claim period should be extended and notification requirements strengthened so that companies must actively inform consumers of the process and deadlines.
"The prepaid installment market is growing quickly, but consumer protection and relief systems remain inadequate," Park said. "The Fair Trade Commission needs to make sanctions for repeated legal violations more effective and closely examine conditions across the industry, including prepaid travel packages." He added, "It must move to improve the system so that consumers can obtain real relief even after a company shuts down."