Uber has faced a number of legal issues in South Korea since the launch of its smartphone app-based taxi service in August 2013, in particular an indictment over violation of the country's public transport laws and the operation of unlicensed taxi services. The government even offers rewards to the public for reporting unlicensed cars operating as taxis. In a new development, Uber is now being investigated for a violation of the Protection and Use of Location Information Act in South Korea.

The Korea Communications Commission (KCC) has announced that it will file a criminal complaint against Uber Korea Technology LLC for breach of the rule which requires both domestic and foreign companies using geolocation services to report certain information to the KCC, such as the nature of the underlying business, the type of geolocation devices and technology being used, and details of the privacy protection measures implemented.

The potential penalties are severe. According to the relevant law, failure to provide this information to the KCC can lead to a jail term of up to a three years or a fine up to 30 million Korean won (roughly $28,000) for each incident.

Geolocation services are at the heart of Uber's car service business. While a spokesman for Uber has stated that the company is looking to resolve any issues of alleged non-compliance, this privacy matter may lead to specific penalties and also impact other regulatory issues affecting Uber's business in South Korea.

TIP: Geolocation technology and services are increasingly common throughout the world, but can also be a very sensitive issue from a privacy perspective. This case is a reminder to ensure that when starting services in a new jurisdiction, you have clearly understood local requirements.