[News Space=Reporter seungwon lee] As Coupang, Korea's largest online shopping platform, is embroiled in a large-scale personal information leak incident, the Fair Trade Commission (FTC) has hinted at the possibility of strong sanctions.

Fair Trade Commission Chairman Joo Byung-ki recently stated in a presidential briefing that Coupang could face a business suspension if it fails to adequately implement consumer compensation measures. Coupang confirmed that the personal information of 33.7 million customers was leaked without authorization via an overseas server over a five-month period beginning June 24th, effectively exposing the information of the vast majority of Coupang's customers. 
 

The scale of the damage are significant

Coupang stated that the leaked information included customer names, email addresses, phone numbers, shipping addresses, and some order history, excluding payment information and credit card numbers. However, Coupang revealed flaws in its response, as it only realized the extent of the damage five months after the incident and initially understated its estimate to 450 victims, only to correct it to 33.7 million just nine days later.

Accordingly, the Fair Trade Commission (FTC) has made it clear that it will consider suspending business operations if consumer damage recovery measures are inadequate. However, it added that if a suspension of business could directly harm consumers, a fine could be substituted .

Considering significantly increasing the maximum fine limit and introducing mandatory investigation powers

The Fair Trade Commission announced that it would strengthen sanctions for repeated violations of the law in response to this incident. The commission is currently pursuing a plan to increase fines for a single violation by up to 50%, up from the current maximum of 20%, and up to 100% for each subsequent violation. In particular, the maximum fine for abuse of market dominance will be significantly increased from the current 6% of relevant sales to levels comparable to those in Japan (10%) and the EU (30%).

The chairman emphasized that “compared to advanced countries such as the EU and Japan, the domestic fine standards are low, which reduces the effectiveness of sanctions,” and that the upper limit should be raised through legal revision. 

The Fair Trade Commission is also considering introducing compulsory investigation powers to enhance the effectiveness of its investigations. Currently, the Fair Trade Commission can only conduct voluntary investigations, but with compulsory investigation powers, the commission would be able to obtain warrants and conduct searches and seizures. Similar to overseas examples in the US and Japan, the introduction of compulsory investigation powers is expected to enhance the effectiveness of sanctions. However, while companies may benefit from a clearer scope of investigation, concerns are being raised about overlapping investigations with investigative agencies and the concentration of power.

President Lee Jae-myung has instructed, "Please consider granting compulsory investigation powers to make punishment through economic sanctions a reality .

Outlook and Implications

Coupang's personal information leak is a prime example of the security management failures and inadequate response of domestic platform companies. The Fair Trade Commission's strong sanctions are expected to strengthen management accountability among platform companies. In particular, the increased fine cap and the introduction of mandatory investigation powers are significant in that they narrow the gap in sanctions levels with overseas countries and strengthen preventative measures against repeated violations. However, concerns about the burden on companies and the concentration of power that may result from the introduction of these systems also need to be addressed.