FTC slams 5 million won fines on 4 ‘power blogs’

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FTC slams 5 million won fines on 4 ‘power blogs’

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The Fair Trade Commission levied fines on bloggers who enticed netizens into buying products from their sites - without confessing that they were paid commissions to hawk the goods.

The FTC yesterday announced that four so-called “power bloggers” with large and loyal followings were fined 5 million won ($4,420) each. They included Babyrose, once touted as the Martha Stewart of Korean cyberspace for her tips on products for the home, and Moon Sung-sil, who has a large following for her expertise in home cooking.

The power bloggers have been earning as much as 880 million won a year from selling products recommended on their blogs. They didn’t tell their followers that they were paid commissions to shill the products from manufacturers or suppliers.

Seven power bloggers were initially targeted, but the FTC let three off.

According to the antitrust agency, Moon Sung-sil earned 880 million won in commissions for selling various food products, including mackerel, on her blog between July 2010 and the end of June.

Babyrose earned 760 million won during the same period.

In a statement, the FTC said that if the bloggers informed subscribers that they were receiving commissions to review or recommend products, customers would have made more cautious decisions about whether to buy the goods.

“We hope this action will prevent the occurrence of similar business malpractices on the Internet while stimulating healthy, legitimate blog marketing by small businesses,” said Sung Gyeong-je of the FTC.

The agency’s investigation of power bloggers’ business practices dates back to July when the controversy over Babyrose, whose real name is Hyun Jin-heui, arose.

Hyun, a 47-year-old self-described housewife, has run the homemaking blog “Babyrose’s Little Kitchen” since 2002.

She eventually had 1.3 million followers and her blog got an average of 150,000 daily visitors, and she wrote cookbooks to capitalize on her fame.

Babyrose’s blog became a target of investigation after an ozone food sterilizer she recommended turned out to be dangerously defective.

More than 3,000 people bought the 360,000 won device - mostly mothers who wanted to provide healthy vegetables and fruits free of pesticides and other chemicals.

Buyers started demanding refunds for their purchases, which Babyrose refused.

It was revealed that the manufacturer paid Hyun 70,000 won for each item she sold. Babyrose sold 3,000 units of the sterilizer and made more than 210 million won between September and October of last year - enough to buy a small house in Seoul.

It was the first time the public realized the amount of commissions a power blogger in Korea receives.

Babyrose’s blog has been practically shut down since July.

As the news of the fines spreads, many netizens posted messages saying they were too light.

“On your blog profile, you describe yourself as a mother, yet you profited 900 million won and only got away with a 5 million won fine,” a follower commented on the Web site of Moon Sung-sil.

Some demanded that the four blogs be shut down entirely.

By Lee Ho-jeong [ojlee82@joongang.co.kr]

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