"Agree" in Bold, "Defer" in Small: Deceptive Tactics Against Consumers... Coupang and Others Sanctioned by Fair Trade Commission

Wavve, Bugs, and Spotify Caught for
"Deceptive Consumer Inducement"

Three online retail businesses, including Coupang, are set to face sanctions from the Korea Fair Trade Commission for inducing consumer transactions through deceptive methods or obstructing contract cancellations.

On October 15, the Fair Trade Commission announced that it had decided to impose corrective orders and a total fine of 10.5 million won on Coupang, Wavve, NHN Bugs, and Spotify for violations of the Electronic Commerce Act. The fines by company are as follows: Coupang, 2.5 million won; Content Wavve, 4 million won; NHN Bugs, 3 million won; and Spotify, 1 million won.

Yonhap News Agency

According to the Fair Trade Commission, in April of last year, Coupang raised the monthly price of its "Wow Membership" by 58%, from 4,990 won to 7,890 won. During this process, the company used misleading tactics on the app's home screen and elsewhere to induce existing subscribers to agree to the price increase.

The "Agree and Continue Benefits" button was prominently displayed to easily catch the subscriber's attention, while the "Do It Later" option, which would defer the price increase, was placed inconspicuously in a smaller size.

During the product purchase process, Coupang subtly inserted the phrase "Agree to Monthly Fee Change and Purchase" in the same size and color as the familiar payment button, making it difficult for subscribers to notice the change.

As a result of these deceptive practices, some subscribers were found to have unknowingly agreed to the Wow Membership price increase.

Coupang voluntarily corrected these misleading practices and accepted withdrawal requests from subscribers who had agreed by mistake. It was found that approximately 48,000 people applied for withdrawal. Since there may be subscribers who did not apply for withdrawal due to inconvenience or other reasons, the actual number of affected individuals is estimated to be higher.

NHN Bugs and Spotify, both music streaming services, were found to have failed to properly inform consumers about the withdrawal period, method, and effects when selling paid subscriptions via their websites and apps until last year.

Spotify was also found to have failed to properly display its identity on the initial screens of its website and app while selling its monthly subscription product, "Spotify Premium Membership."

Subscribers to Wavve, an online video service (OTT), and NHN Bugs can "cancel mid-term" their monthly subscription products. However, the companies were caught for not properly informing subscribers about this option, thereby obstructing contract cancellations.

Coupang, Spotify, Netflix, Watcha, Naver Plus, and Kurly did not introduce a mid-term cancellation option.

For these services, when a subscriber applies for cancellation, only the automatic payment is stopped, and the already paid usage fee is not refunded-only "general cancellation" is possible.

The Fair Trade Commission reviewed the illegality of this practice but decided not to impose sanctions for now. While the commission's investigators believed sanctions were necessary, the committee responsible for making the decision judged that, since the right to cancel subscriptions in the subscription economy is not clearly defined under current law, it would be appropriate to defer judgment until institutional improvements are made.

The Fair Trade Commission stated, "We plan to strengthen monitoring of acts that induce or transact with consumers through deceptive means, hinder rational purchasing choices, or obstruct the exercise of contract cancellation and withdrawal rights, and will impose strict sanctions upon confirmation of legal violations."