Naver Suspected of Inflating Card Benefits and Subscriber Numbers... Fair Trade Commission Begins Sanctions

Fair Trade Commission Sends Review Report Containing 'Sanction Opinion'
Naver "Plans to Cooperate Sincerely with Investigation"

Naver is suspected of exaggerating benefits while promoting affiliated cards and paid memberships, leading the Fair Trade Commission to initiate sanctions.

Naver Headquarters. Photo by Jinhyung Kang aymsdream@

According to industry sources on the 13th, the Fair Trade Commission sent a review report, equivalent to a prosecution indictment, containing sanction opinions regarding Naver's violation of the Act on Labeling and Advertising.

The issues pointed out by the Fair Trade Commission are mainly two: "exaggeration of affiliated card benefits" and "inflation of membership subscribers." Previously, Naver advertised the "Naver Hyundai Card" by stating, "You can receive up to 10% Naver Pay points by combining up to 5% Naver membership points and an additional 5% from the Naver Hyundai Card, with a monthly maximum of 11.42 million KRW."

The Fair Trade Commission believes the actual benefits are less than those stated in the advertisement. The 5% Naver membership points are only available when purchasing certain eligible products, and even then, it is applied only up to a monthly spending limit of 200,000 KRW. Products not eligible for points have no monthly limit but offer a lower accumulation rate of 1%.

Additionally, it was pointed out that detailed information regarding the benefits is difficult to find. Specific details, including the accumulation limit, are posted on a separate page accessible only by clicking the "Check conditions and precautions for benefits" button, making it hard for consumers to verify.

The Fair Trade Commission also reportedly included in the review report that Naver inflated the number of subscribers to its paid subscription service, "Naver Plus Membership." To encourage new membership sign-ups, family and friend members or canceled members who can be invited for free up to three people per paid member were included in the subscriber count.

The Fair Trade Commission investigated these matters and issued sanction opinions stating that such advertising practices constitute false or exaggerated advertising that deceives consumers. The commission plans to hold a plenary meeting soon to decide on the sanctions and their severity.

Separately, the Fair Trade Commission is also investigating allegations that Naver obstructed mid-term cancellations of memberships. Cancellation types are divided into mid-term and general cancellations; mid-term cancellations terminate the contract immediately upon application, ending usage. The unused portion of the paid music service voucher is refunded to the consumer.

However, it was found that Naver Plus Membership operates in a way that even if a mid-term cancellation is requested, the difference is not refunded, and the service continues until the end of the month. This made mid-term cancellation practically difficult. The Fair Trade Commission secured related materials through an on-site investigation earlier this month and plans to conduct interviews with related parties before deciding on sanctions.

A Naver representative stated, "We plan to sincerely cooperate with the Fair Trade Commission's investigation."