Shopping channels refuse banned-herb refunds

South Korea’s major TV shopping companies are refusing to provide unconditional refunds for a popular traditional herb product found to contain an illegal substance, sparking an uproar from customers seeking compensation.

Last week, the Ministry of Food and Drug Safety announced that Korean biotech firm Natural Endotech ― which specializes in making health products using a medicinal herb called Cynanchum wilfordii or “Baeksuho” in Korean ― used a cheaper, toxic ingredient, Cynanchum auriculatum Royal, to make its products.

Though department stores and supermarket chains immediately granted full refunds to customers with receipts regardless of the purchase period, home shopping firms continued to abide by the policy that only unopened products could be refunded within 30 days of the purchase date.

In 2014, home shopping sales accounted for around 75 percent, or 94 billion won ($86.9 million), of the total revenue related to Natural Endotech’s “Baeksuho” products. In comparison, department stores and supermarket chains saw much smaller sales volumes.

Mindful of large-scale losses, the home shopping firms asserted that they could not grant full refunds for Natural Endotech products sold in the past since the former products have not been shown as defective.

On Tuesday, the Korea Consumer Agency recommended that six home shopping giants including CJ O Shopping and GS Home Shopping provide unconditional refunds to customers who had purchased Natural Endotech’s products before and after the discovery of the toxic substance.

The agency said the toxic ingredient has been “found in 90 percent of the (brand’s) products circulating in the market,” warning that “it is highly probable that the products sold in the past also contained this ingredient.”

Following further discussion, the KCA and the TV home shopping companies will reach a final settlement regarding the refund issue on Friday.

Meanwhile, the prosecution raided Natural Endotech’s factory in Icheon, Gyeonggi Province on Monday to seize evidence related to the ongoing case.

By Sohn Ji-young (jys@heraldcorp.com)