As the year-end approaches, trading 'purchase performance' to become a VIP (very important person) at major department stores is becoming a trend. Purchase performance trading refers to the act where customers who have achieved the VIP grade early for the next year through active consumer activity receive a certain commission to have the excess purchase amount accumulated by others.
Since this behavior has been repeated every year-end, a certain market price has now taken root as 'the national rule' (meaning it is commonly accepted). The department store industry is deeply concerned about finding countermeasures, but realistically it is difficult to capture every transaction, leaving them at a loss. The legal community warns that if caught, both the seller and buyer could face up to five years in prison or a fine of up to 15 million won for obstruction of business.
According to Chosun Biz's coverage on the 23rd, many posts buying and selling department store performance can be found on platforms like Carrot and Naver's Secondhand Market. Department stores sum up customers' annual purchase performances to select VIP customers. Lotte Department Store sums performance from December to November of the following year, while Shinsegae, Hyundai, and Galleria department stores accumulate performance from January to December. Posts about performance trading appear most frequently in November and December, which are the final months for aggregating department store performance, and during this time, prices are also at their highest for the year.
Becoming a VIP comes with various benefits including valet parking, free parking tickets, lounge access, discount coupons, and gifts during holidays or at year-end. The perks vary depending on the grade. Lounges available are separated, and the scope and frequency of discounts also differ. Those who have already met their desired VIP grade are trying to sell their extra purchase performances, while those who have not met their performance target are looking to buy.
A consumer using the Shinsegae department store in Gangnam noted, "For mothers dining at the department store, whether they can enjoy coffee in a certain grade of lounge is a point of interest," adding, "There is definitely a demand to buy performance."
When buying and selling performance, commission rates are typically around 4% at Shinsegae and Galleria department stores, and about 3% at Hyundai and Lotte department stores. If someone purchases a performance worth 10 million won, they would be paying approximately 300,000 to 400,000 won. As the year-end approaches, just before the performance deadline, this rate can rise to 8-9%. There are several posts in online communities stating, "I will buy 1.5 billion won worth of performance from XX department store." This essentially means someone is willing to buy the highest VIP grade at the department store with cash. If a transaction is established at a 5% commission, that person would become the top VIP for 7.5 million won.
There are several methods for transferring performance. The most common way is to accumulate performance to the cellphone number of the person looking to purchase after making a payment for a product. If the purchase has already been completed, one can cancel the payment and reprocess it by entering another person's cellphone number.
When transactions occur only online, fraud is frequent. A person looking to buy performance may deposit money to the seller intending to sell their performance, but the seller might only take the money without accounting for the performance. There are also cases where the seller accepts the money and performs the accumulation, but suddenly refunds the product. To avoid such situations, the performance seller and buyer often go to the department store together to complete the accumulation.
◇Obstruction of business applies to both buyers and sellers... possibility of tax investigation as well
Recently, there have also been many cases of trading department store performance together with cash receipts. In fact, a person who has purchased a product issues a cash receipt in a third party's name and receives a commission of about 1-2%. This exploits the point that cash receipts can be issued by just stating a cellphone number while purchasing products with cash or department store gift certificates. For example, if one buys a performance worth 10 million won at 4% and also buys a cash receipt at 1%, they can fill the department store performance and, if conditions are met, receive tax benefits (income deductions) for a total of 500,000 won.
Performance trading acts can pose legal issues. Chan-ran, the representative attorney at Noara Law Office, stated, "Both performance buyers and sellers may be subjected to obstruction of business charges against the department store." If obstruction of business is recognized, one could face up to five years in prison or a fine of up to 15 million won under Article 314 of the Criminal Code. An industry insider remarked, "It is difficult for department stores to individually verify performance trading acts, but even if they do verify, it is ambiguous to prosecute the performance sellers, who are significant clients of the department store, for obstruction of business."
Attorney No said, "In the case of performance buyers, if excessive expenditure is confirmed compared to reported income, they can become subject to a tax investigation," adding, "If it is revealed during the tax investigation that the money was spent by someone else, it falls under Article 3, Paragraph 1 of the Tax Offences Punishment Act related to 'fraud or other dishonest acts'. They could face up to two years in prison or a fine not exceeding twice the amount of taxes refunded or deducted."