The purpose of this Act is to establish a sound distribution order for gift certificates issued by local governments and to contribute to strengthening local communities and invigorating local economies by prescribing matters necessary for the issuance, exchange, management, etc. of community-based gift certificates.
The terms used in this Act are defined as follows:
| 1. | The term “community-based gift certificate” means any securities, the electronic prepayment means defined in subparagraph 14 of Article 2 of the Electronic Financial Transactions Act, and the pre-paid card defined in subparagraph 8 of Article 2 of the Specialized Credit Finance Business Act by which the holder of any certificate, which the head of a local government issues and sells in whatsoever name or form, such as a local gift certificate or local currency, and in which a certain amount or the quantity of goods or services is stated (including recording by electronic or magnetic means; hereinafter the same shall apply), can be provided with goods or services by the head of a local government or a merchant (hereinafter referred to as “gift certificate issuer, etc.”) in accordance with the details stated in such certificate by presenting or delivering the certificate to the gift certificate issuer, etc. or using any other means; |
| 2. | The term "sales agency" means any financial company defined in subparagraph 3 of Article 2 of the Electronic Financial Transactions Act and any electronic financial business entity defined in subparagraph 4 of that Article that act as an agent for the keeping, sale, exchange, etc. of community-based gift certificates by entering into an agreement with the head of a local government under Article 6 (1); |
| 3. | The term "merchant" means any person who is registered pursuant to Article 7 (1) and falls under any of the following: |
| (a) | A person who sells goods or provides services under a transaction using community-based gift certificates (hereinafter referred to as "individual merchant"); |
| (b) | A person who act as an agent for the exchange of community-based gift certificates for an individual merchant (hereinafter referred to as "merchant for exchange as an agent"). |
| Article 3 (Relationship to Other Statutes) |
Except as otherwise provided in other statutes, this Act shall apply to community-based gift certificates.
| Article 4 (Issuance of Local Love Gift Certificates) |
| (1) | The head of a local government may issue community-based gift certificates to invigorate the local economy and strengthen the local community. |
| (2) | A community-based gift certificate shall be valid for five years from the date such gift certificate is issued: Provided, That the head of a local government may issue community-based gift certificates by reducing or extending the validity period thereof, as prescribed by ordinance of the relevant local government, only to the extent that the rights of community-based gift certificates holders, etc. are not infringed upon. |
| (3) | The area where community-based gift certificates are distributed shall be an administrative district under the jurisdiction of the head of the local government that issues such gift certificates: Provided, That the head of the local government may, where necessary, otherwise designate a distribution area, as prescribed by ordinance of the relevant local government. |
| (4) | Other matters necessary for the issuance of community-based gift certificates, such as the types and face values of such gift certificates and matters to be stated therein, shall be prescribed by ordinance of the relevant local government. |
| Article 4-2 (Management of Funds for Community-Based Gift Certificates) |
| (1) | The head of a local government shall establish and operate an account in the treasury of the local government to store and manage money for the issuance, sale, and exchange of community-based gift certificates (hereinafter referred to as "working fund for gift certificates"), such as funds paid for the purchase of community-based gift certificates, the balance on those gift certificates unused during the effective period, and interest accrued in the operation process: Provided, That where it is impossible to establish and operate an account for the working fund gift certificates in the treasury of a local government due to unavoidable reasons, such funds shall be managed in a stable manner through conclusion of a trust contract with a trust business entity under the Financial Investment Services and Capital Markets Act after prior consultation with the Minister of the Interior and Safety, as prescribed by ordinance of the relevant local government. |
| (2) | The head of a local government shall semiannually disclose the status of holding and managing the working fund for gift certificates on the website, etc. operated by the local government. |
[This Article Newly Inserted on Oct. 19, 2021]
| Article 5 (Reporting on Issuance, and Discontinuation of Issuance, of Community-Based Gift Certificates) |
| (1) | Where the head of a local government intends to issue, or discontinue the issuance of, community-based gift certificates, he or she shall report such issuance or discontinuation to the Minister of the Interior and Safety with documents stating the types, face values, etc. of such gift certificates, as prescribed by Presidential Decree. The same shall also apply to any change to be made to the matters reported. |
| (2) | The Minister of the Interior and Safety shall disclose the matters reported under paragraph (1), as prescribed by Presidential Decree. |
| Article 6 (Agreement by and Management of Sales Agencies) |
| (1) | A person who intends to operate a sales agency shall enter into an agreement on sales agency services with the head of a local government, as prescribed by ordinance of the relevant local government. |
| (2) | The head of a local government shall disclose information on the sales agency with which he or she enters into an agreement pursuant to paragraph (1), as prescribed by ordinance of the relevant local government. |
| (3) | A sales agency shall submit a report on the sales, inventory, withdrawn quantity of community-based gift certificates to the head of a local government, as prescribed by ordinance of the relevant local government. |
| Article 7 (Registration of Merchants) |
| (1) | Any person who intends to become a community-based gift certificate merchant in a distribution area under Article 4 (3) shall register with the head of a local government, as prescribed by ordinance of the local government: Provided, That where the head of a local government obtains consent from a person who intends to be a merchant as prescribed by ordinance of the relevant local government, he or she may be deemed to have received an application for registration. <Amended on Oct. 19, 2021> |
| (2) | Where a person who has filed for registration of a merchant falls under any of the following, the head of a local government may refuse such registration: <Amended on Oct. 19, 2021> |
| 3. | Where the person engages in a business or a category of business, which is unfit for the purpose of this Act and subject to restriction on registration, as prescribed by ordinance of a local government; |
| (3) | The head of a local government shall determine whether to register a merchant within seven days (within the period prescribed by ordinance of the relevant local government if an application for registration is deemed to have been received under the proviso of paragraph (1)) from the date of receipt of the application for registration of the merchant, and notify the applicant of the result. <Amended on Oct. 19, 2021> |
| (4) | The head of a local government shall semi-annually disclose the current status of the registration of merchants on the website, etc. operated by the relevant local government. <Newly Inserted on Oct. 19, 2021> |
| (4) | Matters necessary for the registration of a merchant, such as qualification requirements for a merchant and criteria for registration, shall be prescribed by ordinance of the relevant local government. <Amended on Oct. 19, 2021> |
| Article 8 (Revocation of Registration of Merchants) |
| (1) | The head of a local government may revoke the registration of a merchant in any of the following cases: Provided, That he or she shall revoke the registration in cases falling under subparagraph 1: <Amended on Oct. 19, 2021> |
| 1. | When the merchant is registered by fraud or other improper means; |
| 2. | Where the merchant engages in a business or category of business that is subject to restriction on registration under Article 7 (2) 3; |
| 3. | Where the merchant commits any violation referred to in Article 10. |
| (2) | The head of a local government may prevent a person whose registration is revoked under paragraph (1) from re-registering as a merchant for a period prescribed by Presidential Decree for up to one year from the date the registration is revoked. <Newly Inserted on Oct. 19, 2021> |
| (2) | Where the head of a local government revokes registration pursuant to paragraph (1), he or she shall make such revocation known to users and others, as prescribed by ordinance of the relevant local government. |
| Article 9 (Exchange of Community-Based Gift Certificates) |
No person other than a merchant shall exchange community-based gift certificates at a sales agency. In such cases, a merchant for exchange as an agent may exchange community-based gift certificates only for an individual merchant.
| Article 10 (Matters to Be Observed by Merchants) |
| (1) | No individual merchant shall conduct any of the following acts: |
| 1. | Refusing to settle community-based gift certificates or treating community-based gift certificate holders disadvantageously; |
| 2. | Exchanging, or requesting a merchant for exchange as an agent to exchange, the following community-based gift certificates: |
| (a) | Community-based gift certificates received without selling goods or providing services; |
| (b) | Community-based gift certificates received through a transaction in an amount exceeding the actual sales amount. |
| (2) | Where a community-based gift certificate holder purchases goods or is provided with services, in an amount equivalent to or above the percentage prescribed by Presidential Decree, and requests a refund of the balance, an individual merchant shall comply with such request immediately. |
| (3) | No merchant for exchange as an agent shall conduct any of the following acts: |
| 1. | Exchanging community-based gift certificates for a person who is not an individual merchant; |
| 2. | Exchanging community-based gift certificates as an agent while knowing that such gift certificates fall under the items of paragraph (1) 2. |
| Article 11 (Matters to Be Observed by Users) |
| (1) | No user of a community-based gift certificate shall resell such gift certificate. |
| (2) | No user of a community-based gift certificate shall request a sales agency or a merchant to exchange such gift certificate. |
| Article 12 (Re-Issuance of Community-Based Gift Certificates) |
| (1) | Where a person who holds a community-based gift certificate requests the re-issuance thereof because such gift certificate is damaged, the head of a local government shall comply with such request. |
| (2) | Where it is impossible to verify whether a community-based gift certificate is issued by the head of a local government because such gift certificate is damaged, a gift certificate issuer, etc. may refuse the re-issuance and use of such gift certificate: Provided, That where it is possible to verify whether a community-based gift certificate is issued by the head of a local government but its type, amount, quantity, etc. are uncertain, the community-based gift certificate holder may be reissued or use a community-based gift certificate at a minimum price within an extent that is identifiable. |
| Article 13 (Prohibition of Use of Community-Based Gift Certificates for Purposes Other Than Intended Purposes) |
The head of a local government may not give community-based gift certificates in any of the following cases:
| Article 14 (Submission of Records of Issuance) |
The head of a local government that issues community-based gift certificates shall prepare a semi-annual report on the records of the issuance of such gift certificates, including the sum of face values of the gift certificates issued, as prescribed by Presidential Decree, and submit such report to the Minister of the Interior and Safety within one month after the end of each half-year.
| Article 15 (Support for Promotion of Community-Based Gift Certificates) |
| (1) | The State and a local government may provide administrative and financial support necessary for the management of community-based gift certificates, such as the issuance, sale, and exchange thereof, as prescribed by Presidential Decree, in order to promote such gift certificates. <Amended on Oct. 19, 2021> |
| (2) | The head of a local government may sell community-based gift certificates at a discount price within the percentage prescribed by ordinance of the relevant local government. |
| (3) | The Minister of the Interior and Safety and the head of a local government shall endeavor to establish a computerized management system and to develop and distribute related programs in order to efficiently manage affairs regarding community-based gift certificates under this Act and to improve the convenience of using such gift certificates. |
| Article 16 (Establishment of Community-Based Gift Certificate Fund) |
| (1) | A local government may establish a community-based gift certificate fund to support projects or activities for promoting community-based gift certificates. |
| (2) | Matters necessary for the financing, purpose of use, operation, etc. of a community-based gift certificate fund under paragraph (1) shall be prescribed by municipal ordinances. |
| Article 17 (Investigation of Violations) |
| (1) | When the head of a local government finds it necessary to investigate a violation of this Act based on a reasonable doubt, he or she may require a sales agency or merchant to submit a report on its business affairs or data or issue other necessary orders and may have public officials under his or her authority enter its office to inspect books, documents, etc., as prescribed by Presidential Decree. |
| (2) | A public official who enters an office and conducts an inspection pursuant to paragraph (1) shall carry identification indicating his or her authority and present it to relevant persons. |
| Article 18 (Issuance of Community-Based Gift Certificates and Entrustment of Affairs regarding Management Thereof) |
| (1) | The head of a local government may entrust part of affairs related to the issuance and management of community-based gift certificates to a related institution or organization, as prescribed by ordinance of the relevant local government. |
| (2) | The head of a local government may subsidize the implementation of projects entrusted under paragraphs (1) within the budget. |
| Article 19 (Handling of Personally Identifiable Information) |
| 1. | Sale and exchange of community-based gift certificates; |
| 2. | Registration of merchants; |
| 3. | Revocation of registration of merchants; |
| 4. | Re-issuance of community-based gift certificates; |
| Article 20 (Administrative Fines) |
| (1) | Any of the following persons shall be subject to an administrative fine not exceeding 20 million won: |
| 1. | A person who keeps, sell, or exchanges community-based gift certificates as an agent without entering into an agreement with the head of a local government, in violation of Article 6 (1); |
| 2. | A person who performs the affairs of a merchant without filing for registration of a merchant, in violation of Article 7 (1); |
| 3. | An individual merchant who exchanges, or requests a merchant for exchange as an agent to exchange, community-based gift certificates, in violation of Article 10 (1) 2; |
| 4. | A merchant for exchange as an agent which exchanges community-based gift certificates, in violation of Article 10 (3). |
| (2) | A person who refuses, obstructs, or evades an investigation of violations under Article 17 shall be punished by an administrative fine not exceeding five million won. |
| (3) | An administrative fine under paragraphs (1) and (2) shall be imposed and collected by the head of the relevant local government, as prescribed by Presidential Decree. |
ADDENDA <Act No. 17252, May 1, 2020>
Article 1 (Enforcement Date)
This Act shall enter into force two months after the date of its promulgation.
Article 2 (Transitional Measures concerning Local Love Gift Certificates Being Distributed)
Gift certificates issued by the head of a local government pursuant ordinance of the local government before this Act enters into force shall be deemed community-based gift certificates issued pursuant to this Act.
Article 3 (Transitional Measures concerning Reporting on Issuance of Gift Certificates)
The head of a local government that is issuing community-based gift certificates as at the time this Act enters into force shall report such issuance to the Minister of the Interior and Safety under Article 5 (1) within three months from the enforcement date of this Act. Article 4 (Transitional Measures concerning Sales Agencies and Merchants)
| (1) | A person who performs the affairs of a sales agency pursuant to ordinance of a local government as at the time this Act enters into force may perform such affairs without entering into an agreement under Article 6 (1) for up to three months from the enforcement date of this Act. |
| (2) | A person who performs the affairs of a merchant pursuant to ordinance of a local government as at the time this Act enters into force may perform such affairs without filing for registration of a merchant under Article 7 (1) from the enforcement date of this Act to June 30, 2022. <Amended on Oct. 19, 2021> |
ADDENDA <Act No. 18498, Oct. 19, 2021>
Article 1 (Enforcement Date)
This Act shall enter into force six months after the date of its promulgation.
Article 2 (Transitional Measures concerning Administrative Fines)
A person, who started performing the affairs of a merchant after the enforcement date of the Act on the Promotion of Use of Community-Based Gift Certificates (Act No. 17252) and is engaged in the affairs of a merchant at the time this Act enters into force, may perform the affairs of a merchant without filing registration under Article 7 (1) until June 30, 2022.