Coupang fined 140 billion won for manipulating search results to increase sales of its private products

Coupang, which manipulated its search results to increase sales of the company’s private products and mobilized employees to write product reviews, has been sanctioned by the Korea Fair Trade Commission (FTC) with a 100 billion won fine and prosecution charges.

On June 13, the FTC announced that it imposed a 140 billion won fine on Coupang and its subsidiary Coupang Private Label Brands (CPLB) along with a corrective order on suspicion of unfairly inducing consumers through hierarchy according to the Fair Trade Act. This is the largest fine ever imposed on a retailer.

The FTC also decided to refer the companies to prosecutors. CPLB is a wholly owned subsidiary of Coupang, which has been exclusively supplying its private-label products. This is the first time the FTC has referred a company to prosecutors for manipulating an algorithm based on its own judgment.

According to the FTC, Coupang manipulated its webpage’s recommendations algorithm from February 2019 to July last year to expose at least 64,250 private products at the top of the search ranking.

Coupang's private products are divided into direct buying products that Coupang buys and sells products directly from suppliers, and PB products that the company plans and sells products directly and only outsources production to manufacturing subcontractors.

Coupang used methods, such as firmly exposing its products to the first, second, and third places on the search ranking or increasing the basic search ranking score 1.5 times. The fixed exposure products included those with sluggish sales or those the company was supposed to receive rebates from their suppliers. In the process, intermediary products from 210,000 vendors on Coupang's online shopping mall were pushed down from the top of the search ranking. The number of exposures per customer of its private products, which Coupang has fixedly exposed at the top, jumped 43.3 percent and product sales jumped 76.1 percent.

Coupang misled consumers into believing that the "Coupang Ranking" was a search ranking based on objective data. The FTC emphasized that such manipulation violated consumers' right to choose.

In fact, Coupang also said in an internal document that "the top results for certain search words are mostly about PB products, which is causing complaints from other brand companies," and that "products that do not match the current season are artificially displayed at the top, providing customers with an uncomfortable experience."

It was also revealed that Coupang mobilized its employees to post reviews on its PB products. According to the FTC's investigation, the retailer mobilized 2,297 employees to write 72,614 reviews on 7,342 PB products since February 2019. The average star rating of the reviews written by its employees was 4.8. The idea is that the more reviews and the higher the star rating, the more advantageous it is to be exposed at the top of the search ranking.

Coupang also created a manual for the employees to write reviews within one day and to avoid writing negative reviews. The company did not inform consumers that its employees wrote consumer reviews until June 2021, when the FTC's first on-site investigation was conducted.

※This article has undergone review by a professional translator after being translated by an AI translation tool.