The headquarters of e-commerce platform Coupang in Songpa District, southern SeoulYONHAP
Korea's fair trade watchdog on Tuesday slapped a 500 million won ($327,000) fine on the Korean arm of Coupang for posting misleading advertisements about discounts offered to paid membership subscribers.
The Fair Trade Commission (FTC) said the action taken against Coupang, which is the legal maximum that can be applied, was because the company posted misleading advertisements on its website from August 2020 to May 2022 regarding benefits provided to paid membership subscribers.
According to the FTC, the company informed users that members of the Coupang Wow program could purchase certain products at lower prices than regular customers without notifying them that such discounts were only offered through a one-time coupon.
"Coupang released advertisements as if Coupang Wow members had a separate pricing system offering permanent discounts compared with regular prices," the FTC said in a release.
"But the suggested discounted price was only available once through a coupon provided upon subscribing to the membership," it added, noting the company failed to clearly inform users of the conditions attached to the discounts.
The consumer watchdog said Coupang had also displayed exaggerated information about discounts provided under the paid membership during the cancellation process with phrases such as "You will no longer be able to purchase products at Wow membership prices."
The FTC said Coupang's actions could be considered "deceptive advertising" under the Act on Fair Labeling and Advertising, disrupting customers' reasonable purchasing decisions.
The FTC further noted that the fine came as Coupang had experienced a significant rise in its membership based on such misleading advertisements, and that their violation of consumer protection regulations lasted for nearly two years.
Coupang's interim CEO, Harold Rogers, second from left, poses with Coupang's dawn delivery service workers on March 19.COUPANG
The FTC, meanwhile, said discussions are currently under way at the National Assembly to raise the ceiling on fines for misleading advertisements to 5 billion won from the current 500 million won.
The move came as damage to consumers from misleading advertisements has greatly increased due to the spread of AI, while fines have remained low, raising questions about their effectiveness.
