Coupang Fined 500 Million Won for Misleading 'Member Price' Ads

[Anchor]

Coupang has been fined 500 million won for deceptive advertising. The issue stemmed from advertisements that misled consumers into believing that they could always purchase items at a lower price than the regular retail price if they subscribed to the company's paid membership service.

Reporter Chae Hee-sun has the story.

[Reporter]

This is a beauty product sold on Coupang in August 2020.

Although the original price is over 20,000 won, it was displayed as if 'Wow' members, the company's paid subscribers, could purchase it for 3,000 won less.

The company even used phrases like "Member-only special price" to make it appear as though there were exclusive benefits for paid members.

Coupang ran these advertisements from August 2020 to May 2022, but the Korea Fair Trade Commission (KFTC) ruled that these practices were "deceptive to consumers."

While a discounted price for paid members under the name "Wow Member Price" was offered in early 2020 when competition in the online shopping market was intense, such discounts were discontinued starting in August 2020.

Instead, the company provided a discount coupon only once immediately after a user signed up for the membership. Despite this, Coupang advertised as if the "Wow Member Price" was always cheaper without providing any clear notice, thereby inducing users to sign up for the paid membership and hindering consumers' ability to make rational purchasing decisions.

[Coupang Paid Membership Subscriber: I just thought it was cheaper if I used the 'Wow' exclusive price. I'm not exactly sure, but it seems a bit confusing.]

During the 1 year and 8 months that Coupang ran these advertisements, the number of paid members increased by over 4.5 million.

[Lee Young-hee, Head of the Labeling and Advertising Review Team at the KFTC: This is the first case of sanctioning advertisements for price discount benefits linked to a paid membership service. It confirms that the conditions and scope of discount applications for paid membership services must be clearly displayed so that consumers can recognize them.]

The KFTC stated that the illegality was significant, given that important information was concealed for a long period, and imposed a fine of 500 million won, the legal maximum for a fixed-amount penalty.

The commission also announced that it is pushing for a revision of the current Labeling and Advertising Act to raise the penalty cap to 5 billion won, noting that the current limit is too low to be effective as a deterrent.

(Video reporting: Lee Jae-young | Video editing: Choi Jin-hwa | Design: Kim Ye-ji)
※ Please note: This article was translated by AI and may contain errors.