By Yoon Ja-young
The nation’s antitrust watchdog said Friday that it is investigating major social commerce companies for irregular sales practices.
“As social commerce companies deal with a variety of products, they sometimes cause problems despite their efforts to follow the regulations. We noted irregularities involving a certain product they sell, and started an investigation,” an official at the FTC said.
The investigation came as there are growing complaints from customers about irregular sales activities, such as sales of fake goods and exaggerations in advertisements.
The social commerce market has grown explosively to nearly 3 trillion won, from 50 billion won four years ago.
The FTC probed social commerce companies last year as well and set up guidelines for the industry, but irregular practices do not seem to be rooted out.
Ticket Monster, for instance, was indicted along with its employee last month for having sold fake “UGG boots,” a famous Australian brand.
The company sold over 9,000 pairs of the fake boots, manufactured in a factory in China, between October and December 2012, recording about 1.3 billion won in sales.
According to a media report, the Ticket Monster employee told the prosecution that he had no idea that the boots were fake.
Fake goods are continuing to tarnish the image of social commerce, but there does not seem to be fundamental and foolproof solutions.
A Ticket Monster spokesperson said that it was systematically impossible for the company to check the boots, as the fake UGG boots were sent to consumers directly from abroad. It could only trust the seller.
She said that the company bolstered the verification system for such deals where the products are directly sent to consumers. “We take into account the size of the dealer and their transaction history.”
Even when a consumer raises suspicions that a certain product seems to be fake, it didn’t check the authenticity of the goods until such complaints pile up considerably. “Now, we check all those products when more than two consumers report it,” she said.
Coupang, which was penalized by the FTC for misleading consumers to believe a synthetic leather bag was genuine leather last year, said it is running a mystery shopper system where company officials pretend to be consumers.
“We work with a third-party organization to verify the material,” a Coupang spokesperson said.
A spokesperson for Wemakeprice said it temporarily stopped “parallel imports,” where goods are imported by a third party instead of the importer with exclusive rights. “We will resume imports only after preparing fundamental solutions to prevent fake goods,” she said.