district court in the city of Busan, South Korea has fined a woman for putting her place up for rent on Airbnb without first registering with the government, court records revealed Wednesday.
According to Busan eFM news, the court fined a 55-year-old housewife, whose name was not released, 700,000 won ($586) on August 26th “for seeking to profit by renting out her house to people who booked through Airbnb without reporting to the local authorities.”
The report additionally stated that the South Korean public health control act requires anyone who runs an accommodation business to report it to the district office.
The ruling was the first of its kind there as Airbnb continues to acquire market share in Korea with estimates saying there have been around 200,000 rentals yearly since the service debuted in the country in January 2013.
Reports say that the government’s main issues is not with the service itself but with the fact that that people are not paying taxes for the rental income. There are also zoning issues which prevent residential areas from operating as a business.
That considered, had the woman sought to register for Airbnb rentals, she would likely have been denied a license to do so.
The Korea Times reports that several hotel operators have filed complaints with the police demanding a crackdown on such operations that hurt their business.
Is this a trend?
This is the second time this year that South Korea has curbed a non-licensed foreign enterprise that also operates in the gray in other jurisdictions internationally.
Uber, the popular taxi service, has recently been cited as an example. After several legal restrictions were placed on the company, including an arrest warrant issued for the CEO, Uber ceased its normal business operations.
The Korean legislation passed in May of this year was in reaction to Uber’s successful entrance into the country. It made it illegal for unlicensed drivers to provide taxi services –making Korea the first country in the world to put in place a nationwide prohibition on such services.
Soon thereafter, Korean instant messaging app company KakaoTalk came out with what is now the widely-popular KakaoTaxi service which operates with a similar business model but using professional taxi drivers instead of unlicensed drivers.
As director of operations for KakaoTaxi told Bloomberg, Kakao’s success came from a willingness to work with the government as well as taxi drivers who were threatened by the non-licensed competition.
Uber still maintains a small operation there using licensed taxis, but KakaoTaxi has quickly dominated the field, with talk of possibly even expanding it to the U.S.