Gyeonggi Province to Conduct On-site Inspections of Sponsorship-based Door-to-Door Sales Companies

The Gyeonggi Provincial Government will conduct on-site inspections of door-to-door sales companies operating under the sponsorship system within the province. This measure is intended to prevent consumer harm and to check whether companies are complying with the obligations stipulated by the Door-to-Door Sales Act.

Sponsorship-based door-to-door sales refer to a form of direct selling, as defined by the "Act on Door-to-Door Sales, Etc.," in which a salesperson sells goods or services to consumers and receives sponsorship commissions based on the performance of other salespeople. It is distinguished from multi-level marketing in that only the immediate upper-level salesperson, based on individual performance, is eligible to receive the sponsorship commission.

From June to July, the Gyeonggi Provincial Government will carry out on-site inspections of nine independent business operators among the province's registered sponsorship-based door-to-door sales companies.

This round of inspections is notable for shifting the focus from affiliated agencies of existing corporate groups to independent business operators. The initiative aims to intensively manage vulnerable sectors where there are concerns about consumer harm, such as the transformation into or disguised operation of multi-level marketing schemes. Last year, the provincial government also conducted on-site inspections of 12 sponsorship-based door-to-door sales companies in the province from September 22 to December 2.

Gyeonggi Provincial Government

The Gyeonggi Provincial Government plans to focus on checking whether companies have filed for changes to their registration details, whether they have entered into consumer damage compensation insurance contracts, and whether they comply with sponsorship commission payment standards. The inspections will also verify prohibited acts under the Door-to-Door Sales Act, such as whether refunds are issued upon cancellation of subscription and whether products exceeding 2 million won per item are sold.

The inspection process will be accompanied by guidance and preventive education for companies on legal compliance. This is intended to foster a culture of voluntary legal compliance among sponsorship-based door-to-door sales companies and to prevent consumer harm in advance.

If any violations are identified, the Gyeonggi Provincial Government will take administrative measures in accordance with relevant laws, such as issuing administrative guidance, recommending corrective action, or imposing fines, depending on the type and severity of the violation.

Seo Bongja, Director of the Fair Economy Division at the Gyeonggi Provincial Government, stated, "We are conducting on-site inspections to establish a sound business order in the sponsorship-based door-to-door sales market and to prevent consumer harm," adding, "We will respond strictly to illegal and unlawful business practices, while continuously encouraging companies to voluntarily comply with the law."

This content was produced with the assistance of AI translation services.