Advance Payment Protection Service

Frequently Asked Questions (FAQ)

Q. What is Advance Payment Refund Guarantee Insurance? Can this insurance alone prevent trade fraud?

A. Advance Payment Refund Guarantee Insurance is a policy where an insurer, such as Seoul Guarantee Insurance (SGI), guarantees to refund the advance payment to the buyer (importer) if the seller (exporter) fails to ship the goods as per the contract. It is a powerful safeguard that can protect the buyer's entire advance payment even in worst-case scenarios, such as the seller disappearing or failing to perform. Since sellers with poor credit may be denied coverage, it also serves as a method to verify the seller's credibility. However, this insurance only protects the advance payment and does not cover other damages, such as those related to product quality.

Q. We are trading using only an invoice, without a formal contract. Can I still receive legal protection?

A. Yes, it is possible. In many small-scale trade transactions, business is conducted using only an invoice. YEOHAE LAW FIRM can assist with enrolling in advance payment guarantee insurance with just an invoice and will handle the necessary legal procedures if an incident occurs. However, we strongly recommend using a formal contract, such as the templates we provide.

Q. What specific services are included in the Advance Payment Protection Service?

A. The service includes: verifying the terms of the guarantee insurance needed to protect the advance payment in an export contract; confirming the authenticity of the insurance certificate upon receipt; handling the legal procedures to demand performance and terminate the contract with the seller in case of an insured event; filing the claim with the insurance company; and transferring the received insurance payment to you. This service does not include contract advisory, consultation on the trade process, or litigation against the insurer or the other party.

Q. What should I do if the Korean seller refuses to enroll in the insurance?

A. A legitimate and credible seller should have no reason to refuse insurance that guarantees their performance of the contract. If a seller refuses to enroll without a valid reason, it can be interpreted as a significant red flag. In such a case, you should carefully reconsider whether to proceed with the transaction.

Q. I signed up for the service, but the Korean seller was denied coverage for the advance payment guarantee insurance due to poor credit. What happens now?

A. If the seller cannot obtain the insurance due to poor credit, our Advance Payment Protection Service will also be terminated, and we will refund half of the service fee. This process allows you to indirectly verify the seller's creditworthiness, helping you decide whether to proceed with the transaction without insurance protection.

Q. Can I apply for the Advance Payment Protection Service after an incident has already occurred?

A. No, you must apply for YEOHAE LAW FIRM's service before the guarantee insurance is issued. If an incident has already happened, you will need to engage our services for standard litigation procedures.

Q. Is this service only available for the used car trade?

A. No, the Advance Payment Protection Service from YEOHAE LAW FIRM can be used for trading other goods as well, such as cosmetics.

Q. I sent an advance payment to a Korean used car company, and now they are unreachable. I think I've been scammed. What should I do?

A. If the advance payment has already been sent, the matter must be resolved through legal procedures such as a lawsuit. Since formal litigation can be time-consuming and expensive, we recommend using our Advance Payment Protection Service beforehand.

Q. Can I be protected from all contractual breaches, not just the loss of the advance payment?

A. Yes. By obtaining a Performance Bond Insurance certificate from the seller, you can be compensated for losses arising from other contractual breaches, such as non-delivery, product defects, or shipping delays. However, the screening process for Performance Bond Insurance is more stringent, and the premiums are higher. If you wish to use a Performance Bond instead of an Advance Payment Guarantee for your transaction, please contact our office.

Q. I have a judgment from a foreign court. How can I collect money from a Korean company?

A. Even if you have a judgment against a Korean company from a foreign court, you must first obtain an enforcement judgment from a Korean court to execute it against assets within Korea. This process is lengthy and costly, which is why YEOHAE LAW FIRM recommends using the Advance Payment Protection Service as a preventative measure.

Q. Is multilingual consultation available?

A. Yes, our staff can provide consultations in English, Vietnamese, and Russian. Consultations in Chinese, Japanese, Thai, and other languages are available by appointment.