No-Show Fees Hit 40%—Only 14% of Restaurants Collect Deposits

Korea’s No-Show Penalty Cap Just Jumped from 10% to 40%

On December 18, 2025, Korea’s Fair Trade Commission (FTC) revised and enforced the Consumer Dispute Resolution Standards¹. The cap on no-show penalty fees for restaurant reservations, previously set at 10% or less of the total bill, was raised to 20% or less for ordinary restaurants, and to 40% or less for “reservation-based restaurants” — places like omakase and fine-dining venues that prepare ingredients specifically for a booking — as well as for pre-notified group or bulk orders.

Looking at the numbers alone, the amount a restaurant can charge for a single no-show has effectively quadrupled. But a government survey released around the same time tells a different story: far fewer restaurants than you’d expect can actually invoke this standard.

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Before You Can Charge a Penalty, You Need a Deposit

The Ministry of SMEs and Startups commissioned the Korea Foodservice Industry Central Association and the Korea Small Business Institute to survey 214 restaurants from November 24 to December 10, 2025. 65% reported having suffered no-show damage within the three years since 2022. Among the affected restaurants, the average was 8.6 incidents over three years, with an average loss of about ₩443,000 (~$319) per incident. 35% of affected restaurants had gone as far as seeking damages or filing a complaint.

In the same survey, only 14% of restaurants had set up a reservation deposit² system. The overwhelming majority — 95% — took reservations by phone, while Naver and Kakao reservations accounted for 18%, and restaurant reservation apps just 5%. A phone reservation that only records a name and party size offers no way to even verify who the reservation-holder is.

Applying the revised standard comes with conditions. Businesses must notify customers in advance, through an easily understandable method like a text message, of the deposit amount, the penalty amount, and the refund criteria. If a restaurant intends to treat lateness as a no-show, it must also disclose that criterion beforehand. If the penalty is smaller than the deposit, the difference must be refunded to the customer. For reservations made without this process, the grounds for imposing a penalty are weak to begin with.

It’s also worth noting what kind of standard this actually is. The Consumer Dispute Resolution Standards are not a law but an FTC notice. Article 16, Paragraph 3 of the Framework Act on Consumers stipulates that this standard serves as a basis for agreement or recommendation only “where there is no separate expression of intent regarding a method of dispute resolution.” It isn’t a mechanism that lets businesses automatically charge a penalty the customer never agreed to — it’s closer to a benchmark that mediating bodies refer to once a dispute has already arisen.

The Same Name, But Not the Same Customer

The word “no-show” has been coming up more often lately, and reservation-skipping isn’t the only reason. A scam that impersonates public agencies, military units, or corporate purchasing managers to place bulk orders and pocket the payment is being lumped under the same label.

According to regional police agency data obtained by Representative Park Jung-hyun’s office from the National Police Agency, 2,892 no-show fraud cases were reported between January and July 2025, with total damages of ₩41.4 billion (~$29.8 million). Only 22 cases were solved in that period — a clearance rate of 0.7%. Gyeonggi led with 577 cases and ₩7.9 billion (~$5.7 million) in damages, followed by Gyeongbuk with 284 cases and ₩3.8 billion (~$2.7 million), and Seoul with 281 cases and ₩3.3 billion (~$2.4 million). Most victims are small business owners.

The mechanics differ from a simple reservation no-show. Step one: the scammer places an order for goods or a large group dinner with the target business. Step two: they say “we’ll pay together, just buy something from another vendor on our behalf first” and get the victim to wire money. The order itself is bait — what they’re really after is the reimbursement for that “proxy purchase.” In January 2026, the Seoul Eastern District Prosecutors’ Office indicted 23 members of a Cambodia-based ring who had impersonated military units and others to defraud 215 small business owners of roughly ₩3.8 billion (~$2.7 million).

Neither a reservation deposit nor a penalty cap does anything against this type. Charging 40% of the total order amount makes no sense when the other side never intended to show up in the first place.

The Problem Gets Sorted Out at the Bank Account Level

The one practical tool for reducing fraud damage is a payment freeze³ — freezing the account before the wired money moves out is what creates any chance of getting it back. But no-show fraud sits outside that entire process.

Article 2, Clause 2 of the Special Act on the Prevention of Damage from Telecommunications-based Financial Fraud and Refund of Fraudulent Proceeds defines “telecommunications-based financial fraud,” but its proviso explicitly excludes “acts disguised as the supply of goods or provision of services,” covering only acts disguised as loans. No-show fraud disguised as merchandise delivery or proxy purchasing falls squarely into that excluded category. As of the law currently in effect on September 8, 2026, this exact clause is still there, unchanged.

As a result, cases keep piling up where victims report to their bank but no freeze gets placed on the account. On June 17, 2025, the Korea Federation of Micro Enterprises, a small-business trade association, issued a statement saying that even freezing a fraudulent account is nearly impossible under current rules, and called for a legislative fix. In 2026, financial regulators pursued a different route: revising standard operating manuals and response guidelines so that, whenever there is even a slight chance the law applies, a police check can trigger a swift freeze. It’s an approach that patches the gap through operational guidance rather than through the statute itself.

The government’s response has followed that same fault line. Starting in 2026, the Ministry of SMEs and Startups announced it would expand the scope of its Unfair Trade Practices Counseling Center for small businesses to cover no-show fraud victims, offering legal consultations and conducting regular annual surveys on the scale of the problem. In March 2026, the National Police Agency signed a memorandum of understanding with the Korea Small Enterprise and Market Service (Semas) to share fraud tactics and run prevention campaigns. One track helps victims deal with disputes after the fact; the other just spreads the word about the crime.

What the person taking reservations can actually change right now

Situation	What works	What doesn’t
Customer skips a reservation	Advance notice + reservation deposit, revised standard in case of disputes	After-the-fact billing without prior notice
Impersonated bulk order	Phone verification with the ordering party, refusing requests to purchase on someone else’s behalf	Penalty caps, reservation deposits
Realizing after the money’s been sent	Reporting to 112 and requesting a payment freeze from the bank	Automatic relief under current law

For the raised penalty cap to actually matter, the reservation has to exist as a record. CatchTable, a reservation management service, says that at restaurants using its deposit system, the annual no-show rate holds around 0.1%—though since this is the company’s own internal figure, it’s hard to read as an industry average. Still, the direction is clear. Where a reservation has been turned into a contract backed by payment and contact information rather than just a spoken promise, the penalty standard actually means something.

The rule for bulk orders is simple. Verify directly with the ordering organization’s official phone number, and treat any request to buy goods “on behalf of” another vendor as a red flag in itself. If a caller claiming to be military personnel seems suspicious, you can verify their identity through the Ministry of National Defense Help Call at 1303.

Oswarld’s Lens

It’s hard to sum up this revision as simply “the no-show measures got tougher.” What actually rose was the benchmark referenced when disputes arise — and for that benchmark to matter, the procedures of notice and deposit have to already exist at the moment of booking. Only 14% of the businesses surveyed had those procedures in place. Raising a standard and building the record that makes the standard operable are two different jobs, and right now it’s the latter that’s missing.

What stands out more is that a single word is being used to point at two entirely different systems at once. No-show cancellations are a matter of civil disputes, governed by the Fair Trade Commission’s notice. Fraudulent bulk orders under stolen identities are a matter of criminal and financial regulation, governed by payment-freeze rules. Yet in the news and in search bars, both get called “no-shows.” When the name is the same, the results of the countermeasures start to look the same too. The moment a hike in the penalty-fee cap gets read as a countermeasure against fraud, the actual sticking point — the still-unresolved payment-freeze clause — gets pushed out of the conversation.

Separating the terminology might look like a minor point, but the name itself is what determines which problem gets handled by which agency, using which tool. What’s needed right now looks less like raising penalty fees further, and more like counting these two problems separately.

Closing

What this piece covered was the scope of institutions and statistics. There’s still no nationwide time series that tells us whether no-shows have actually increased or decreased. Since the Ministry of SMEs and Startups has said it will conduct this survey every year, the point to watch is whether next year’s survey produces the first comparable baseline.

💬 Reader, when you’re taking reservations or orders at your shop or company, what conditions do you disclose upfront? If you’ve switched away from phone-only reservations, let us know in the comments.

📨 Pass this piece along to a small-business-owner friend who takes reservations, or to a contact at a client company that often fields bulk orders.

References & Further Reading

Primary sources

• Korea Policy Briefing, “Restaurant ‘no-show’ penalty fees up to 40%… revised Consumer Dispute Resolution Standards take effect”, December 18, 2025. ··· The original text lays out the revised standard’s application conditions and the changes for wedding halls and lodging.
• Etoday, “Ministry of SMEs and Startups strengthens support for small business no-show damage”, January 1, 2026. ··· Survey figures are broken down by category.
• Seoul Economic Daily, “₩41.4 billion (~$29.9 million) in damages this year alone, arrest rate just 0.7%”, September 2025. ··· Contains regional case counts and damage figures submitted by the National Police Agency.
• Korea Law Information Center, “Article 2, Special Act on the Prevention of Damage from Telecommunications-based Financial Fraud and Refund of Damaged Assets”, effective September 8, 2026. ··· Read the proviso excluding acts disguised as provision of goods or services directly from the source.

Background

• Easy-to-Find Living Legal Information, “The nature of the Consumer Dispute Resolution Standards”. ··· Explains in one paragraph why this standard functions as a settlement/recommendation guideline.
• Law Times, “Trends in voice phishing eradication measures and revisions to the Enforcement Decree of the Telecommunications Fraud Victim Refund Act”, April 2026. ··· Lays out, from financial institutions’ perspective, where payment-suspension practice tends to stall.
• Kukinews, “‘No-show fraud needs a pan-government eradication plan,’ says Korea Federation of Micro Enterprise”, June 17, 2025. ··· Shows when the affected trade group first raised the proviso-clause problem.
• Asia Today, “Recurring no-show problems in the restaurant industry… Catch Table’s case amid the search for solutions”, February 3, 2026. ··· Introduces how stores that adopted reservation deposits actually operate them.

The author is Oswarld (Kwangseob Ahn). Current roles: Adjunct Professor at Sejong University, Strategy Consultant at INLEVEL9. Career, research, books, and recent work are kept current on the About page. Latest · July 2026: HEMA-2: A Consolidation-Aware Tri-Memory Architecture with Multi-Channel Scheduling for Lifelong Conversational AI.

📝 Glossary

Footnotes

1. Consumer Dispute Resolution Standards: A notice set by Korea’s Fair Trade Commission under Article 16 of the Framework Act on Consumers. It serves as the benchmark for mediation when there’s no separate agreement between disputing parties, but it isn’t itself a legally binding statute. ↩

2. Reservation deposit: A sum a customer puts down in advance to confirm a booking. If the customer honors the reservation, it’s deducted from the final bill or refunded; if it’s a no-show, it’s forfeited as the set penalty. ↩

3. Payment suspension: A measure that freezes withdrawals from an account used in fraud. It can only be requested for cases that fit the categories defined by the Special Act on Telecommunications-based Financial Fraud, and it leads into a subsequent claim-extinguishment process through which victims are refunded. ↩