Advance Payment Protection for Imports from Korea
When you pay a Korean seller before the goods ship — used cars, cosmetics and more — a guarantee and a law firm stand behind your deposit.
Advance Payment Protection: Key Facts
- What problem does it solve?
- When you pay a Korean seller before shipment, the seller may disappear or never ship. The service pairs a refund guarantee from an insurer with a law firm that handles the claim if that happens.
- Who provides the guarantee?
- The Korean seller takes out advance payment refund guarantee insurance from an insurer such as Seoul Guarantee Insurance (SGI) and pays the premium, typically 1–2% of the advance.
- What does it cost the buyer?
- A service fee of 1% of the transaction value (minimum KRW 550,000), plus the same again only if a claim has to be handled.
- When must it be set up?
- Before you pay and before the guarantee is issued. It cannot be added after a loss has occurred.
- What is not covered?
- Product quality and other losses beyond the advance, unless the seller provides a performance bond.
Where are you now?
Compared With Other Ways to Protect a Trade
Compared with a letter of credit or escrow, refund guarantee insurance is cheaper and quicker to arrange, and the seller receives the advance promptly without having to prove its creditworthiness to you. The risk lies in the details: if the policy is not set up correctly, or the claim procedure is not followed after a default, the insurer may refuse to pay. That is the part we handle.
| Category | Refund guarantee insurance | Letter of credit (L/C) | Escrow | Litigation after the loss |
|---|---|---|---|---|
| Protects | Buyer | Seller | Buyer and seller | Buyer |
| Cost | Low | High | Medium | Very high |
| Strengths | Low cost, quick to set up, secures the advance, tests the seller's credit | Secures payment collection | Payment and goods exchanged together | Rights confirmed by a court judgment |
| Weaknesses | No quality assurance | No quality assurance; high fees and paperwork | No quality assurance; high fees | Nothing to recover if the seller has no assets; slow, costly and stressful |
Service Fees
| Item | Amount | Paid by | Notes |
|---|---|---|---|
| Basic service fee | 1% of the transaction value (minimum KRW 550,000) | Buyer (importer) | Charged when the service is requested. |
| Claim handling fee | 1% of the transaction value (minimum KRW 550,000) | Buyer (importer) | Charged only if the seller breaches and claim handling begins. |
| Insurance premium | Set by the insurer, typically 1–2% of the advance | Seller (exporter) | Paid by the seller directly to the insurer; not part of our fee. |
| Litigation | Agreed separately | Buyer (importer) | Only if the insurer refuses to pay; outside the scope of this service. |
Setting Up the Protection
- Sign the sales contract
A used car sales contract template is available in Korean and English. An invoice can also work, though a contract is better.
- Request the service
Send us the contract or invoice and the seller's details.
- Seller takes out the insurance
The seller obtains the refund guarantee and sends us the certificate. We check that it is genuine and that its terms protect your advance — then you pay.
If the seller does not perform
- Report the problem at once
For example, if the goods have not shipped by the agreed date.
- Demand and termination
We demand that the seller perform and, if it does not, terminate the contract in the form the insurer requires.
- Insurance claim
We file the claim with the insurer and transfer the payout to you.
Credit Checks and Foreign Judgments
Credit check. Considering a deal and want to know whether the Korean company is creditworthy? We can provide a credit report and our view on whether to proceed.
Foreign judgments and awards. If you already hold a judgment or arbitral award against a Korean company, it must first be made enforceable by a Korean court. See Enforcing Foreign Judgments in Korea.
Frequently Asked Questions
What is advance payment refund guarantee insurance? Can it prevent trade fraud on its own?
It is a policy under which an insurer, such as Seoul Guarantee Insurance (SGI), refunds the advance payment to the buyer if the seller fails to ship as agreed. It can protect the whole advance even if the seller disappears, and because sellers with poor credit may be refused cover, it also tests the seller's credibility. It does not cover other losses, such as poor product quality.
We trade on invoices without a formal contract. Can I still be protected?
Yes. Many small transactions run on invoices alone, and the insurance and our legal handling can work on that basis. We still strongly recommend a formal contract, such as our templates.
What exactly does the service include?
Checking the guarantee terms needed to protect the advance, confirming that the insurance certificate is genuine, demanding performance and terminating the contract if the seller fails to perform, filing the insurance claim, and transferring the payout to you. It does not include contract advice, trade consulting, or litigation against the insurer or the seller.
What if the Korean seller refuses to take out the insurance?
A credible seller should have no reason to refuse insurance that guarantees its own performance. A refusal without good reason is a serious warning sign, and you should reconsider the transaction.
What if the seller is refused cover because of poor credit?
The service ends and we refund half of the service fee. The refusal itself tells you something about the seller's creditworthiness before you pay.
Can I use the service after something has already gone wrong?
No. The service must be in place before the guarantee is issued. If the loss has already happened, recovery requires ordinary legal proceedings.
Is the service only for used cars?
No. It can be used for other goods as well, such as cosmetics.
I already paid a Korean used car company and now they are unreachable. What should I do?
Once the money has been paid without a guarantee, it has to be recovered through legal proceedings, which take time and money. Contact us promptly: where there is a risk that assets will be moved, they can be frozen first by provisional attachment.
Can I be protected against other breaches, not only loss of the deposit?
Yes, with a performance bond from the seller, which can cover non-delivery, defects or late shipment. Screening is stricter and premiums are higher; contact us if you want to use a performance bond instead.
I have a foreign court judgment against a Korean company. How can I collect?
You first need an enforcement judgment from a Korean court before assets in Korea can be seized. Because that takes time and cost, protecting the payment in advance is far cheaper.
Is consultation available in other languages?
Yes. Our staff consult in English, Vietnamese and Russian, and in Chinese, Japanese, Thai and other languages by appointment.
Representative Attorney Pyoungho Kim
- 2011
- Passed the Judicial Examination
- 2011
- 1st Bar Exam Reviewer (Ministry of Justice)
- 2012
- 54th Judicial Examination Reviewer (Ministry of Justice)
- 2013
- Seoul Central District Court Civil Conciliation Committee
- 2013
- Deputy Prosecutor at Jeonju District Prosecutors' Office
- 2013
- Professional Institutional Training in the Office of a National Assembly Member
Full career (12 more)
- 2013
- KOTRA Washington Trade Center — Study on U.S. Government Procurement Laws
- 2015
- Member, International Committee of the Korean Bar Association
- 2015
- Member, Autonomous Committee for Countermeasures against School Violence, Seoi Elementary School, Seoul
- 2017
- Director and Legal Advisor, Korea Paragliding Association
- 2017
- Member, Review Committee, Seoul Bar Association
- 2017
- Seoul Family Court Adult Guardian
- 2020
- Delegate, The Law Times
- 2020
- Regulation Reviewer, Seoul Entrepreneurs Association
- 2020
- Member, Committee for the Protection of School Rights, Seoi Elementary School, Seoul
- 2021
- Korean Bar Association Young Lawyer Award
- 2021
- Excellent Lawyer selected by the Korean Bar Association
- 2023
- Member, Administrative Action Deliberation Committee, Ministry of Land, Infrastructure and Transport (current)
Education: Yonsei University, Department of Physics · Languages: Korean, English · Press coverage (Naver News, Korean)
Certifications and awards
Reviewed by Pyoung-ho Kim, Attorney at Law · Last updated 8 November 2026
Get a Free Consultation
Send us the draft contract or invoice, the seller's name and the amount of the advance. Our team replies in English, confirms what guarantee the seller should provide, and explains the next steps before you pay.
Korea +82-2-537-2370 · +82-2-537-4455
Hours Mon–Fri, 9:30–18:00 (Korea time)
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