LGU+ Calls Accusations of Its Multilevel Marketing Tactics "Unfair"

Admin   |   30 June, 2015   |   744   |   3980

In response to growing controversy over LG Uplus (LGU+)’s multilevel marketing (MLM) tactics, LGU+, the third-largest mobile carrier in S. Korea, said Monday that it would fix them if there were any irregularities.

LGU+ made such a comment as the Korean Communications Commission (KCC) and the Korea Fair Trade Commission (KFTC) were taking aim at S. Korean mobile operators’ rampant MLM tactics. As of now, the KCC and the KFTC believe that LGU+ has spearheaded unfair multilevel marketing tactics in the mobile communications sector.

“There have been various changes in our sales channels since the implementation of the "Mobile Device Distribution Improvement Act,” which puts a ceiling on subsidies that carriers can use to entice customers. Mobile phones are selling through various channels within the boundaries of the law. Fundamentally speaking, there is no problem. But if some of our sales methods turn out to have breached the law, we will correct our mistakes,” said Choi Joo-sik, chief of LGU+’s service creation (SC) division, at a press conference held in Yongsan-gu, Seoul.

Asked about the recent controversy over the illegality of LGU+’s MLM tactics, Choi mentioned, “As multi-level marketing is often associated with pyramid schemes, people are raising their eyebrows at us. However, the implementation of the Mobile Device Distribution Improvement Act has brought varied changes to our sales channels. We are not alone in using such sales tactics. We just became a lightning rod for criticism because our rivals first pointed an accusing finger at us. This is unfair.”

On June 16, KCC Chairman Choi Sung-joon said, “The KCC has been conducting a probe into one mobile carrier since June 1. And we have found out that only one of the nation’s three mobile carriers was engaged in multi-level marketing on a large scale.” The mobile carrier, under scrutiny according to KCC Chairman Choi, was LGU+.

Meanwhile, civic groups, such as Seoul YMCA, have requested the KFTC to launch an investigation into two MLM companies, IFCI and B&S Solution, saying their mobile phone MLM tactics have violated the Door-to-Door Sales Act.

LGU+ is alleged to have forced sales people working for the MLM companies to buy certain mobile phone models and use expensive cell phone plans.