NYSE-listed Coupang faces crisis

South Korean retailer suffers from massive customer information breach.

SEOUL, Dec. 8 (UPI) -- South Korean top online retailer Coupang is facing a crisis after a data breach exposed information from 33.7 million customer accounts, or more than 63% of the country's population of 51.7 million.

Coupang acknowledged late last month that names, email addresses, phone numbers and delivery addresses were leaked, although it claimed that payment information and credit-card data were not compromised.

The fallout has been swift, with clients showing signs of abandoning the popular e-commerce platform and potential victims filing lawsuits at home and abroad.

According to data from local analytics firm IGAWorks on Monday, the number of daily active users of Coupang declined more than 10% in the last week, dropping to 16.18 million Friday from 17.99 million Dec. 1.

The company also faces growing legal risks as more lawsuits emerge.

Seoul-based law firm Chung already filed suit in a Seoul court early this month on behalf of 14 Coupang users. It seeks $136 in compensation per plaintiff.

"This kind of lawsuit takes quite a lot of time. Hence, we started the process early on. The number of participants may increase in the future," Chung lawyer Kwak Joon-ho said in a media interview.

Another law firm, Daeryun, said it plans to pursue a class action against Coupang in the United States. The global head office of Coupang is Seattle, and the company is listed on the New York Stock Exchange.

"Our U.S. affiliate SJKP will lead the lawsuit against Coupang. As the U.S. law permits a class action, we will seek punitive damages with the aim of raising corporate awareness," Daeryun lawyer Jason Jang told UPI.

The Seoul administration is expected to impose heavy sanctions on Coupang, according to President Lee Jae Myung, who said that during a Cabinet meeting earlier this month.

"We are required to identify the cause of the incident as soon as possible and hold those responsible strictly accountable," Lee said. "I urge the relevant ministries to take effective and practical measures, such as strengthening fines."

Lee raised the possibility of punitive damages.

The state-run Personal Information Protection Commission is likely to levy substantial fines. Under South Korean law, financial penalties can reach up to 3% of a company's related revenue.

As Coupang reported sales of $2.8 billion last year, potential fines could top $800 million for a record amount since launch of the commission in 2020. The previous high fine was less than $100 million.

South Korea vulnerable to hacking accidents

Coupang's massive data breach adds to a string of recent security failures involving major South Korean corporations, including leading mobile carrier SK Telecom.

Earlier this year, SK Telecom admitted that a cyberattack compromised sensitive data on its network, compromising critical information of up to 24 million subscribers.

As a result, the firm was fined $92 by the commission and was required stop adding clients for nearly two months, in line with the government guidelines.

Last month, the nation's No. 1 crypto exchange, Upbit, experienced a breach in which virtual assets worth $30 million were transferred from its hot wallets to unauthorized external wallets.

AhnLab, a leading cybersecurity company, noted that the country remains an appealing target for hackers.

"The concentration of cyberattacks on South Korea can be attributed to its high dependence on IT, the high value of its digital assets and its relatively low level of investment in information security compared to the global average," AhnLab Director Yang Ha-young told UPI.

Sogang University economics Professor Yoon Suk-bin voiced similar concerns.

"Korea has digitalized most sensitive personal information, and the data is owned by a small number of large corporations. Hackers can strike a jackpot by targeting them," Yoon said in a phone interview.

"Worse, our companies tend to cut their security budgets when incidents do not occur," he added. "As platforms grow larger, they should crank up investment in security infrastructure, but in reality, they move in the opposite direction."

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