A fine of about 4.1 billion won was imposed on seven TV home shopping companies that passed on promotional expenses and employee labor costs to their suppliers.
The Fair Trade Commission announced on the 5th that GS SHOP, Lotte Home Shopping, NS Home Shopping, CJ OnStyle, Hyundai Home Shopping, Home & Shopping, and Public Shopping will be fined 4. TV home shopping has been criticized for its high commission rate compared to other fields and frequent abuses such as passing on promotional expenses.
In fact, according to the FTC investigation results, it was confirmed that six TV home shopping companies, including GS SHOP, handed over all the cost of freebies to the supplier without an agreement to share the promotional cost with the supplier. Although Home&Shopping entered into a cost-sharing agreement, it violated the Large-scale Distribution Business Act, which stipulates that suppliers cannot bear more than 50% of the total promotional cost.
Seven TV home shopping companies, including GS SHOP, dispatched employees at the expense of the supplier without a written agreement on dispatch conditions and used them as broadcast guests, demonstration models, and audiences. The large-scale distribution business law permits dispatch only if labor costs are directly paid or the supplier voluntarily requests it.
Hyundai Home Shopping entrusted the supplier to repackaging and repairing products that were partially damaged in the process of returning them to the supplier, and did not pay any fees. Home&Shopping did not pay any logistics costs incurred in this process. The three TV home shopping companies, including GS SHOP, did not pay for product sales due to foreclosure or other reasons, or did not pay delayed interest in the process of paying late. These companies paid unpaid payments and delayed interest to suppliers only after the Fair Trade Commission started an investigation.
GS SHOP also returned the inventory of direct purchase products to the supplier even without justifiable reasons such as product defects. In order to guarantee the lowest delivery price when signing a direct purchase contract, Lotte Home Shopping forced its supplier to not deliver to other operators at a lower price.
Park Ki-heung, head of the Fair Trade Commission’s distribution and transaction division, said, “We will closely monitor the supply transaction relationship of non-face-to-face distribution channels, such as TV home shopping, T-commerce, and online shopping malls.”