Naver Inflated Paid Membership Benefits, Fair Trade Commission Sanctions Deceptive Advertising

Benefit Details Must Be Clearly Stated Near Main Advertisement

Naver was sanctioned by the Fair Trade Commission for exaggerated advertising, such as inflating the point benefits of its paid membership service, 'Naver Plus Membership.'

On the 11th, the Fair Trade Commission announced that it had decided to issue a corrective order and impose a future prohibition order on Naver for deceptive advertising related to the points accumulation and digital content usage benefits provided upon subscription in its online advertisements for Naver Plus Membership.

Naver Plus Membership is a paid subscription service operated by Naver, which offers additional point accumulation benefits for purchases on Naver Smart Store and digital content usage benefits upon subscription.

According to the Fair Trade Commission, from June 7 to 28, 2022, Naver conducted a 2nd anniversary advertisement for Naver Plus Membership online, during which it concealed key information about the points accumulation benefits and digital content usage benefits in places difficult for consumers to find, constituting deceptive advertising.

Naver advertised on the main membership subscription page that "Naver membership points accumulation never ends" and "Membership accumulation benefits apply up to a maximum of 5%."

However, it was difficult for consumers to recognize important restrictions such as the fact that the 5% accumulation only applies up to a cumulative payment amount of 200,000 KRW, and only 2% is accumulated beyond that; the accumulation limit per product is 20,000 KRW; and duplicate accumulation is not possible when purchasing multiple units of the same product, as these details were placed in hard-to-find locations.

Additionally, although subscribers can only select and use one digital content per month rather than all five simultaneously upon membership subscription, these important restrictions were placed so that they could only be seen after multiple clicks.

Regarding the use of SPOTV NOW among the available digital contents, although subscribers can actually watch all games of the teams to which five selected Korean players belong without limits, this important restriction was not disclosed anywhere on the advertisement page.

A Fair Trade Commission official stated, "These actions were judged to be deceptive advertising that could mislead consumers into believing the accumulation benefits were greater than they actually are, potentially interfering with rational purchasing decisions."

The Fair Trade Commission explained that this measure is significant in that it detected and corrected unfair advertising related to membership subscription benefits amid fierce competition in paid membership marketing in the recent e-commerce industry, thereby enabling fair competition in the related market through accurate information provision to consumers.

However, the Fair Trade Commission added that since the advertising period was relatively short at 22 days and consumers were given the option to cancel after receiving two months of free benefits upon membership subscription during the advertising period, actual consumer damage was minimal, and thus no fines were imposed.