Naver headquarters in Seongnam, Gyeonggi Province / Korea Times file
By Lee Kyung-min
Korea's two IT giants, Coupang and Naver, are under investigation by the Fair Trade Commission (FTC) over allegations that they falsely advertised membership benefits and deceived customers, according to industry watchers, Wednesday.
A dozen investigators with the antitrust agency were dispatched to the headquarters of Coupang in Songpa District, southeastern Seoul, and Naver in Bundang District of Seongnam, Gyeonggi Province, from late Monday through Tuesday, to conduct on-site investigations.
Coupang allegedly sold goods to non-member customers at a lower price than those who paid monthly fees of 4,990 won ($3.82) for Wow membership, a sales practice Wow members characterize as reverse discrimination.
Coupang logo
The allegation was first raised in May and amplified since then due to a large number of Coupang users filing complaints with a government website run by the Anti-Corruption & Civil Rights Commission.
Many claimed that the prices shown to members and non-members alike indicate Wow members would be able to buy goods at cheaper prices compared to non-members, but the price is the same when Wow members make a purchase.
Coupang in response put out a press release the same month disclaiming the allegation.
"We provided one-time coupons to new users and those whose accounts remained dormant for some time, in line with our standard promotional activities," it said. "The instances mentioned by some are individual isolated cases where different coupons are applied to different users with varying purchase activities. We have not charged Wow members a higher price."
Naver, some allege, falsely advertised membership benefits provided to users of Naver-Hyundai Card, a credit card that ran a promotional campaign allowing customers to use over 11 million won in mileage every month, since part of the monthly card transaction amount will be returned to them in the form of cash-equivalent points.
The operator of the country's largest portal came under tight scrutiny, amid fierce competition among major e-commerce operators to increase the number of subscribers paying for membership.
Many remained suspicious that Naver, among other industry leaders, inflated the number of membership subscribers, as borne out by the discrepancy between membership income and the number of subscribers in the first three months of this year.
Naver said the number of subscribers stood at 7 million, but the income from the 4,900 won monthly dues in the same period came to 23.6 billion won.
This, according to market watchers, meant that only 1.6 million people are paying the monthly dues, far short of the 2 million to 3 million claimed by the IT giant.
Coupang reported sales of $5.16 billion (6.73 trillion) in the first three months of this year. Its net loss was $292.9 million (382.4 billion won).
The FTC declined to comment on the specifics of the investigation, citing that it is still ongoing.
