Government Launches Nationwide Crackdown on Illegal Distribution of Local Love Gift Certificates

Conducting Overall Compliance Inspections for Franchisees and Users... Imposing Fines up to 20 Million KRW for Confirmed Illegal Distribution

[Asia Economy Reporter Lim Cheol-young] The government will launch a nationwide crackdown starting on the 16th to prevent the fraudulent distribution of local love gift certificates.

On the 15th, the Ministry of the Interior and Safety announced that considering the rapid increase in sales of local love gift certificates this year, it will operate a "simultaneous crackdown period" from the 16th to the 31st, lasting 16 days, with participation from local governments nationwide.

Until now, crackdowns have been conducted irregularly at the local government level, but the frequency and duration of these crackdowns varied by local government. This year, in light of the nationwide significant increase in sales of local love gift certificates, the government plans to operate a simultaneous crackdown period involving all local governments to eradicate fraudulent distribution of these certificates.

The main targets of the nationwide simultaneous crackdown are: ? Creating fake affiliated stores to illegally receive or exchange gift certificates without selling goods or providing services; ? Affiliated stores illegally receiving or exchanging gift certificates by inflating transaction records beyond actual sales.

Additionally, enforcement will also cover overall compliance by affiliated stores and users as stipulated by law to promote the use of local love gift certificates. Most local governments are currently operating their own fraud prevention systems in collaboration with entrusted management companies for local love gift certificates, and these systems will be used for preliminary analysis in preparation for the simultaneous crackdown. To ensure effective fraud enforcement, local governments will strengthen cooperation with related organizations such as small business associations, and a reporting center for fraudulent distribution will be operated via websites and phone lines.

If clear fraudulent distribution is confirmed during this simultaneous crackdown period, fines of up to 20 million KRW will be imposed according to relevant laws, and administrative and financial measures such as recovery of unjust profits and cancellation of affiliated store registration will be enforced. Furthermore, for affiliated stores suspected of serious crimes such as large-scale fraudulent distribution, strict punishment will be pursued through police investigations.

Park Jae-min, Director of the Local Finance and Economy Office at the Ministry of the Interior and Safety, stated, “We will thoroughly investigate affiliated stores abusing the local love gift certificates, which were introduced to revitalize the local economy during the difficult COVID-19 period, to ensure that the gift certificates circulate in a virtuous cycle.”

This content was produced with the assistance of AI translation services.