The Financial Supervisory Service will launch an inspection into Coupang affiliate Coupang Financial over its "high-interest loans."
On the 8th, according to the financial authorities, the Financial Supervisory Service (FSS) sent Coupang Financial an advance notice the previous day that it will launch an inspection next week. The FSS began an on-site review of Coupang Financial early last month and is shifting to a formal inspection after about a month.
On the 5th, Lee Chan-jin, governor of the FSS, met with reporters and even referred to Coupang Financial as "gapjil." The inspection will cover Coupang Financial's "seller growth loans." The product lends up to 50 million won in business funds to merchants on Coupang's marketplace based on their sales performance, at an annual rate of up to 18.9%.
In its on-site review, the FSS is said to have identified indications of violations of the Financial Consumer Protection Act in areas such as the appropriateness of interest rate calculations and rules for handling and repaying loans. The product has drawn criticism for applying excessively high rates to merchants, leveraging the dominant position of a major retail platform.
The FSS is also said to be examining whether Coupang Financial sold "collateral loans," which tie merchants' settlement receivables as repayment funds, while setting the interest rate as if it were an unsecured "credit loan."
The product applies a contracted repayment ratio of up to 20% of sales to set repayment amounts for each settlement cycle, and requires borrowers to repay 10% of principal every three months along with interest accrued during the period as a minimum repayment condition. If arrears continue because the minimum repayment condition is not met, the structure allows the financial firm to recover principal and interest on the loan by using the settlement funds the seller is to receive from Coupang and Coupang Pay as collateral.
An excessively long payment cycle compared with other firms is also subject to inspection. Lee Chan-jin said, "Other retail platforms settle as early as the next day, but Coupang's payment cycle is far longer, more than a month, which was puzzling," and noted, "It appears they arbitrarily applied an unconvincing interest calculation standard, resulting in profiteering."
Separately, the FSS is conducting an on-site review of Coupang Pay in connection with Coupang's personal data leak. The plan is to immediately switch to an inspection if indications of illegality are found.