South Korea fines Coupang $415,000 for deceptive 'Wow Member Price' advertising

South Korea's Fair Trade Commission (KFTC) has imposed a 500 million won fine on e-commerce giant Coupang for deceptive advertising related to its paid 'Wow Membership' program. The KFTC found that Coupang misled consumers by implying that prices labeled 'Wow Member Price' were consistently lower than regular prices, thereby encouraging sign-ups for the membership.

An investigation revealed that from August 2020 to May 2022, Coupang advertised that members of its Wow Membership would always receive discounts. However, the KFTC determined that these 'Wow Member Prices' were often based on one-time discount coupons. Consumers were led to believe these lower prices were a permanent benefit of the membership, but in reality, they could not purchase items at the same 'Wow Member Price' after using the initial coupon.

The commission also noted that Coupang used phrases like 'Save X won with Wow Member Price,' 'Get discounts with Rocket Wow,' and 'Member-exclusive special price.' Furthermore, the company displayed the discounted price applicable to a single item across all products eligible for that coupon, creating the impression that all items could be purchased at the 'Wow Member Price.' This practice was deemed a violation of the Display and Advertising Act for being deceptive.

The KFTC concluded that Coupang's advertising obstructed consumers' rational purchasing decisions by falsely representing the benefits of its paid membership. The commission believes Coupang employed these deceptive tactics to foster a 'lock-in effect,' encouraging consumers to make repeat purchases on its platform, especially during a period of intense competition in the online shopping market. During the period of the misleading advertisements, Coupang's Wow Membership reportedly grew by approximately 4.5 million members.