This is the FTC’s first penalties imposed on social commerce companies, which use social networks in the context of e-commerce transactions. The market has reached more than 10 trillion won in Korea, according to industry data.
Wemakeprice was imposed with the largest penalty of 93 million won, followed by Coupang with 21 million won and Ticket Monster with 16 million won.
According to the FTC, Wemakeprice did not issue written contracts to some of its partner companies from November of 2014 to June of 2016. Under the retail law, a company must issue a written contract, specifying a form of contract, items and period, immediately after a contract is signed.
The social commerce firm also delayed payment to its 13,254 partner firms during the first half of 2015 without paying delay charges amounting to 3.8 billion won, according to the FTC.
Wemakeprice forced its partners not to sell the same products sold on its online platform to other platforms for the first three months when sales begin, the watchdog also said. Otherwise, the partner firm have to pay 1 million won in penalties.
Coupang and Ticket Monster were caught for similar unfair practices, including not providing written contracts and delaying payment without delay charges, the FTC said.
“Amid growing social commerce in the online shopping sector, we will continue to monitor such unfair practices and take strong measures on them,” said Moon Jae-ho, chief of the FTC’s business trade policy division.
The FTC said it would also strengthen its monitoring on the online commerce market, whose market volume has grown to around 50 trillion won last year, according to industry data.
By Shin Ji-hye (email@example.com)