The Fair Trade Commission announced on July 28 that it imposed a combined fine of 17.5 million won (US$16,000) on the six food delivery app companies for hiding negative online reviews and ordering their employees to post positive ones.
|Baedal Minjok is the No. 1 food delivery app in Korea.|
The companies were also found to have placed food restaurants that bought ad services or paid fees on top of the “most popular” or “most reviewed” sections of their apps even though the restaurants do not meet proper standards.
Market leader Baedal Minjok alone was slapped with a 2.5 million won fine.
Despite the tiny penalty amounts, it seems unavoidable that the FTC decision would deal a blow to the soaring food delivery app market where consumer trust is crucial.
The industry as a whole has often been under fire due to below-par services and unreliable and unscrupulous policies to choose must-eat dishes and must-visit places to eat. They also had difficulty in managing to match the reviews and descriptions posted on their food delivery apps with the real quality and services of their partner restaurants.
Woowa Brothers, which operates Baedal Minjok, has already been bleeding money for years due to the neck-and-neck competition in Korea.
After years of losses, the company said it posted an operating profit of just 900 million won (US$801,000) in the first half of this year. It was the first time for the company, which attracted more than 100 billion won from global investors including Goldman Sachs and Hillhouse Capital Group, to post an operating profit since its launch in 2010.
By Kim Young-won (firstname.lastname@example.org)