AliExpress and Temu logo

South Korean authorities are intensifying scrutiny on Chinese e-commerce companies such as AliExpress (Ali) and Temu over allegations of deceptive advertising practices. These include clickbait ads claiming “free if you choose five products.” The Korea Fair Trade Commission (KFTC) has commenced an investigation into these companies following rising consumer complaints.

Since late May, Temu has been running YouTube and Facebook ads claiming new members can purchase high-demand items like Nintendo Switch consoles and Galaxy Z Flip smartphones for a dollar. However, consumers discovered these offers require recruiting numerous new members, and the products are only available on a first-come, first-served basis. Essentially, only one person could secure a Nintendo Switch for $1, leading to accusations of false advertising. Temu defended the promotion, saying, “Since it’s a special promotion, we may impose conditions such as first-come, first-served. Temu’s advertisement contains truth.”

An ad from Chinese e-commerce company Temu claiming that Samsung's latest smartphone, the Galaxy Z Flip 5, is available for 999 won.

Ali faces similar criticism. Its ‘Ali VIP Free Trial’ membership, advertised as a 30-day free trial, allegedly charged users $19.9 for a year’s membership upon signing up. Customers who sought refunds were offered discount coupons instead of monetary returns. In response to a backlash in March, Ali claimed to be reorganizing its membership system and has since suspended new VIP membership signups and trials. Additionally, Ali was found using images from South Korean e-commerce company Coupang, misleadingly labeling them as “imported from Coupang.” Ali said it removed the infringing products but noted that such incidents are common in the e-commerce industry.

Consumers have also reported encountering misleading ‘clickbait ads’ from both Ali and Temu. These advertisements feature high-priced items like laptops and smartphones at unusually low prices. However, clicking the ads often leads to inexpensive accessories like laptop cases instead of the advertised products. One consumer wrote, “I installed the app after seeing a Temu ad on YouTube that sold a car emergency power supply for 1,228 won for new subscribers, but when I went to purchase it, it was a battery case.”

As consumer complaints grow, the KFTC’s investigation into Ali and Temu is expanding. The KFTC reports that Ali is under investigation for misrepresenting list prices and discount advertisements. Temu is scrutinized for promoting always-available coupons as limited-time offers and for misleading claims about free gifts contingent on inviting friends.

Han Ki-jeong, Chairperson of the KFTC, announced at a press conference on June 21, “We plan to confirm the e-commerce violations of Ali and Temu and submit them for deliberation soon.” The KFTC aims to conclude its investigation by the third quarter of this year.