Fair Trade Commission Files Police Complaints Against 3 Illegal Multi-Level Marketing Door-to-Door Sales Companies in Gangnam, a 'COVID-19 Hotspot'

[Asia Economy Reporter Moon Chaeseok] The Fair Trade Commission announced on the 3rd that it conducted a joint inspection of illegal door-to-door sales companies together with Gangnam-gu, Seoul, and the Gangnam Police Station, and reported three companies to the police.

The Fair Trade Commission urged special caution to prevent middle-aged and elderly people, who are vulnerable to COVID-19 infection, from being exposed to door-to-door sales.

Illegal door-to-door sales companies tend to gather many people, attract customers in a short period, and then disappear. This makes them particularly vulnerable to the spread of COVID-19 infection. It is difficult to trace the routes and also causes consumer damage.

The Fair Trade Commission, together with Gangnam-gu and the Gangnam Police Station, conducted a joint inspection over three days on the 25th, 26th, and 28th of last month targeting suspected illegal door-to-door and multi-level marketing companies in Gangnam-gu, Seoul.

Despite the spread of COVID-19, the Fair Trade Commission reported that there were tips that sales and briefing sessions continued in Gangnam-gu using high profits and side jobs as bait.

As a result of the inspection, three illegal unregistered companies selling heating mats, cosmetics, and functional shoes were caught, which had only reported door-to-door sales but were actually conducting multi-level marketing.

The Fair Trade Commission filed a complaint with the police on the same day under Article 58 of the Door-to-Door Sales Act. According to Article 58 of the Door-to-Door Sales Act, unregistered multi-level marketing operators face imprisonment of up to seven years or fines of up to 200 million won.

Earlier, on the 26th of last month, Gangnam-gu had imposed a ban on gatherings after inspecting two places classified as high-risk facilities (door-to-door sales promotion centers) for compliance with on-site quarantine rules.

The Fair Trade Commission announced plans to take measures such as ▲ activating an emergency inspection team ▲ filing complaints upon detection of illegal sales ▲ notifying relevant authorities about similar door-to-door sales companies.

Since June 1st, the Fair Trade Commission has formed and started operating an "Illegal Door-to-Door Sales Emergency Inspection Team" focusing on detecting and sanctioning illegal door-to-door sales companies.

The Central Disaster and Safety Countermeasures Headquarters announced on the 19th of last month that inspections of illegal door-to-door sales companies would be conducted until the 11th of this month, but the period has been extended by one week to the 18th, during which local governments, police, and others will conduct intensive inspections.

The emergency inspection team plans to conduct unannounced inspections not only in Gangnam-gu but also on companies reported for illegal multi-level marketing and those with complaints filed through the Safety Newspaper platform.

In future inspections, if unregistered or unreported illegal sales are detected, the principle is to respond strictly by immediately filing complaints or requesting investigations.

Additionally, for similar door-to-door sales companies that have reported door-to-door sales but engage in activities such as fraudulent fundraising or virtual currency briefing sales, the Fair Trade Commission will immediately notify relevant institutions such as the Financial Supervisory Service to request verification of legality.

Ryu Yongrae, head of the Special Transactions Division at the Fair Trade Commission, said, "Illegal door-to-door sales pose a serious risk of consumer damage," and requested, "Especially middle-aged and elderly consumers are vulnerable to infection, so please be especially cautious not to visit illegal door-to-door sales companies or purchase their products."

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