Riman Korea, known for its cosmetics “Incellderm”, has been sanctioned by the Fair Trade Commission for illegal multi-level marketing.
The Fair Trade Commission reported on the 8th that it had filed a complaint with the prosecution against Riman Korea and its representatives for violating the law on door-to-door sales and imposed corrective orders.
Riman Korea sells the Incellderm and Botalab brands, and as of the end of last year, it had over 83,000 salespersons. Last year’s sales amounted to 174.7 billion won, ranking seventh in the multi-level marketing industry.
According to the Fair Trade Commission, Riman Korea operated through multi-level marketing while registered as a sponsorship door-to-door sales business from March 2020 to November 2024. It was investigated for establishing sales organizations with three or more levels without registration as a multi-level marketing business and for paying sponsorship commissions to agency heads and branch managers linked to the sales performance of subordinate salespersons.
The sponsorship door-to-door sales business is subject to relaxed regulations exempting it from capital requirements, consumer damage compensation insurance contracts, and limits on sponsorship commission payments, unlike the multi-level marketing business. The Fair Trade Commission determined that Riman Korea had been operating while evading regulations. During the investigation process, Riman Korea clarified that it was unaware whether its sales method fell under those requiring multi-level marketing registration, and at the end of last year, it registered as a multi-level marketing business.
It was also discovered that Riman Korea approved name changes for salespersons who registered in another person’s name, allowing individuals not registered as multi-level salespersons to act as salespersons. Riman Korea applied for a consent resolution to the Fair Trade Commission in April of last year, but the Fair Trade Commission did not accept it.
A Fair Trade Commission official noted that “this action serves as a case of sanctioning a sponsorship door-to-door sales company for paying sponsorship commissions without registering as a multi-level marketing company,” and added, “it is significant in that it has raised compliance awareness in the related industry and contributed to establishing fair transaction order.”