Home plus under fire for client data leaks

By Jung Min-ho

Lee Seung-han Homeplus Chairman

Do Sung-hwan Homeplus CEO

Former Home plus Chairman Lee Seung-han and current CEO Do Sung-hwan will be questioned by prosecutors Friday over allegations that they aided the selling of customers’ personal data to insurance firms.

The Seoul Central District Prosecutors’ Office said Wednesday it has issued summonses for the two men, who have been banned from leaving the country since September.

“The questioning will focus on how Home plus signed contracts with insurance firms to provide its customer data,” a prosecutor told reporters.

Home plus, a discount store chain wholly owned by U.K. retail giant Tesco, allegedly sold the personal information of some 9 million clients to 10 insurance companies over the past five years. The firm obtained the data from hundreds of its outlets by holding lotteries for those who provided such information.

Each customer’s private information was sold for up to 4,000 won, resulting in allegations that the firm earned at least 10 billion won ($9 million) from the sales.

Prosecutors believe that Lee and Do played pivotal roles contacting the insurance firms, and may have pocketed sums of money.

The firm has claimed that the provision of customer data was not illegal, and that it gave prior notice to all participants of the lotteries that all information provided would be delivered to insurance firms for marketing.

However, the prosecution launched an investigation based on complaints from consumer groups and Home plus customers who claimed they were “cheated.” They said they have received a flood of calls and text messages from insurance firms.

In September, prosecutors raided the offices of Lina Korea and Shinhan Life Insurance as part of their investigation. Last month, they asked eight other insurance firms to provide related information.

The Home plus union said that management regularly pressed cashiers to have customers register for the lottery events, setting daily targets.

The union said that the company even offered incentives for those who met certain requirements.

It later turned out that the lotteries were fraudulent.

In September, prosecutors indicted two employees, identified only by their surnames Jeong and Choi, on charges of fabricating lottery results and helping their friends win four luxury vehicles as prizes between May 2012 and June of this year.

The employees allegedly conspired with Choi’s friend, surnamed Kim, and a subcontractor to set up the computer programs so that Kim won the top prizes.

The prizes, two BMW 320d models, an Audi A4 and a K3, were worth about 150 million won.

Prosecutors later indicted two additional Home plus officials and one event agency employee for being part of the fraud.