Coupang Hit with Record Fine Amidst Police Probes and Lawsuits

E-commerce giant Coupang is facing a record fine of approximately 620 billion won (about $465 million) from South Korea's Personal Information Protection Commission. This penalty, the largest ever imposed in the country for such violations, stems from alleged data breaches and related issues.

However, the financial penalty is just one facet of Coupang's mounting legal and administrative challenges. The company is simultaneously embroiled in multiple investigations. Police have established a dedicated task force of 86 members to probe various allegations, including the circumstances of personal data leaks, potential evidence tampering by executives, perjury by current and former employees, and the alleged concealment of issues related to employee overwork.

Specifically, the police are examining whether Coupang deliberately created confusion during investigations and destroyed evidence by pushing its own narrative about the data leak's scale, which was reportedly much smaller than initially suggested by the company. Furthermore, former and current executives, including ex-CEO Park Dae-joon and CEO Harrold Rogers, are facing accusations of perjury for statements made in parliamentary hearings. Coupang Inc. Chairman Kim Beom-seok and other high-ranking officials are also under investigation for violating the National Assembly Audit and Inspection Act.

Beyond the police probes, Coupang is also under scrutiny from other regulatory bodies. The Fair Trade Commission is investigating allegations that Coupang bundled its streaming service, Coupang Play, with its Wow membership program. Additionally, the Seoul Regional National Tax Service has conducted special tax investigations into both Coupang's logistics subsidiary and its headquarters.

Adding to its legal woes, Coupang is facing civil lawsuits from individuals affected by the data breaches, with multiple law firms representing them in claims for damages. The Personal Information Protection Commission acknowledged considering Coupang's compensation to users as a mitigating factor for the fine. However, the compensation, primarily in the form of purchase vouchers for less-used services like Coupang Travel and Alux, has drawn criticism as a deceptive measure.

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The Personal Information Protection Commission stated that it considered the provision of user compensation as a factor in reducing the fine imposed on Coupang.