Coupang Fined 140 Billion Won For Unfair Search Algorithms And False Product Reviews
The Fair Trade Commission (FTC) has imposed a fine of 140 billion won ($12.44 million) on e-commerce giant Coupang. The
By: : Linda John
Update: 2024-06-13 05:45 GMT
Coupang Fined 140 Billion Won For Unfair Search Algorithms And False Product Reviews
The Fair Trade Commission (FTC) has imposed a fine of 140 billion won ($12.44 million) on e-commerce giant Coupang. The penalty is for the company’s use of unfair search algorithms and the posting of false product reviews to increase sales of its own private-label items.
In addition to the fine, the FTC has referred Coupang and its subsidiary, Coupang Private Label Brands (CPLB), to the prosecution for further investigation. The regulator has also ordered the company to implement corrective measures.
According to Yonhap news agency, Coupang has been manipulating its search algorithms since February 2019 to give preferential exposure to its private-label products over those from other suppliers. This deceptive practice affected at least 64,250 product types, leading to a sales surge of over 76 percent for these items during the period.
The investigation revealed that Coupang employed 2,297 staff members to write favourable reviews of their private-label products. These employees generated a total of 72,614 reviews for 7,342 different private brand items, significantly increasing the visibility of these products. These actions were found to be in violation of the Monopoly Regulation and Fair Trade Act.
"Such practices have prevented customers from making reasonable choices and hampered fair market competition," the FTC stated, promising strict action against such unfair business practices.
CPLB, established in July 2020, is responsible for managing and selling Coupang’s private-label products.