Korean retail giants face imminent legal action by government authorities after allegedly deceiving shoppers.
The Korea Fair Trade Commission (FTC) is mounting a legal challenge against retailers including E-mart, Lotte Mart, and Homeplus over their misleading ‘buy one, get one free’ deals, after reports emerged accusing the supermarket chains of doubling the original price of products to deceive consumers into thinking they were effectively paying half price.
The FTC levied 62 million won (US$54,700) in fines against the major three South Korean supermarket giants last November over false advertising after the regulatory authority found they changed the price of 34 products before they became part of their special deals.
For instance, a single container of ssamjang (a spicy paste widely used in Korean cuisine) selling for 2600 won suddenly doubled in price when it was part of a ‘buy one, get one free’ deal, leaving the price paid by consumers essentially unchanged.
The FTC slammed the deal, citing regulations stipulating that when businesses promote items on sale, the discounted price must be lower than the price at which the original products have been sold for the previous 20 days.
The supermarket chains are hitting back, however, having filed a counter lawsuit calling for the case brought against them by the FTC to be dismissed at Seoul High Court last Sunday.
The retail giants accused of false advertisement defended their controversial discount deals, saying that the original price of the products was already discounted before they were featured in a ‘buy one, get one free’ deal.
“’Buy one, get one free’ deals are an evolved form of marketing strategy, different from regular discounts. All the major supermarket chains have been offering special deals like this for a while, but since the FTC suddenly decided to issue a corrective order, we are filing a counter lawsuit against the FTC,” one industry official said.
“If the court accepts the FTC’s view, a drastic change regarding the ‘buy one, get one free’ deals is expected to take place,” the official added.
- Originally reported by Hyunsu Yim of Korea Bizwire