FTC Imposes Maximum Legal Fine on Coupang... Will the '1 Trillion Won Bomb' for Data Breach Become Reality?

Personal Information Protection Commission Deliberates Level of Sanctions for Coupang Data Breach

Fine May Reach Up to 3% of Sales, Maximum of 1.3 Trillion Won

Coupang Returned to the Red After Fair Trade Commission Fine Two Years Ago

As the Personal Information Protection Commission has begun procedures to determine the level of sanctions against Coupang for the personal information leak incident that occurred in November last year, attention is focused on whether a record-breaking fine exceeding 1 trillion won will be imposed. Coupang achieved an unprecedented operating profit of 2 trillion won in the domestic retail sector last year, but if a fine on the trillion-won scale is imposed, it would inevitably deal a major blow to its operations, drawing interest to how the company will respond.

A Coupang logistics center in downtown Seoul. Photo by Yonhap News Agency

The Personal Information Protection Commission convened a plenary session at the Government Complex Seoul on June 10 to begin deliberating sanctions against Coupang, following the leak of over 33 million personal information records. Previously, in April, the Commission sent Coupang a preliminary notification outlining violations of the Personal Information Protection Act and the details of the proposed administrative measures. The basis for this assessment was the investigation findings released in February by the private-public joint investigation team under the Ministry of Science and ICT, which found that 33.67 million pieces of personal information, including names and email addresses, had been leaked.

Based on this, industry experts expect that the Commission will impose the largest fine ever on Coupang. Under the current Personal Information Protection Act, fines of up to 3% of annual sales may be imposed in the event of a personal information leak. Since the breach involved only domestic users, the sales of Coupang Corp., the Korean entity, are likely to be used as the reference point for setting the fine level.

According to the Financial Supervisory Service's electronic disclosure system, the consolidated sales of Coupang Corp. and its subsidiaries—the Korean corporate entity—reached 45.4555 trillion won last year, an 18.7% increase from the previous year. Based on these figures, the maximum statutory fine that could be imposed on Coupang amounts to 1.3637 trillion won. This is about ten times greater than the previous record fine of 134.8 billion won imposed by the Commission last year for the SK Telecom USIM information leak incident. It is also a sum that exceeds half of Coupang Corp.'s operating profit of 2.2883 trillion won from last year, posing a critical blow to the company's operations.

Previously, in August 2024, Coupang was fined 162.8 billion won by the Korea Fair Trade Commission for manipulating algorithms to favor its own private brand (PB) products and for having employees write product reviews. The fine, calculated based on relevant sales from 2019 through June of that year, was the largest ever imposed in the domestic retail industry and amounted to 84% of the previous year's second-quarter operating profit of Coupang's parent company, Coupang Inc. (194 billion won).

Coupang Inc. posted its first-ever quarterly net profit in the third quarter of 2022, but after preemptively recording the fine as a loss, it suffered an operating loss of 34.2 billion won and returned to the red after eight quarters. In response to the Fair Trade Commission's fine, Coupang filed for a stay of execution and initiated administrative litigation; the case remains unresolved.

The actual fine imposed by the Personal Information Protection Commission may be lower than 1.3 trillion won, as the final amount will reflect the scope of sales related to the violations, as well as any mitigating or aggravating factors. However, given that an astronomical fine exceeding the penalty for algorithm manipulation is inevitable, Coupang is widely expected to contest the decision in court once again. It is known that, when the Commission sent the preliminary notification, Coupang requested an extension for submitting its opinion and later submitted a statement indicating that it could not agree with most of the Commission's findings.

Meanwhile, just the previous day, Coupang was fined 500 million won by the Fair Trade Commission for misleading advertising—presenting a one-time coupon price as if it were a continuous benefit available to paid members, known as the "Wow Member Price." According to the Commission, from August 26, 2020, to May 15, 2022, Coupang highlighted the Wow Member Price as being cheaper than the regular sales price, while concealing or omitting the crucial fact that the Wow Member Price was only available when a one-time coupon was applied for paid Wow membership subscribers. The Commission determined that this constituted "deceptive labeling and advertising" under the Act on Fair Labeling and Advertising, as it hindered consumers from making rational purchase decisions. The 500 million won fine is the maximum statutory amount for fixed fines imposed for unfair labeling or advertising acts under current law.

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