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I . RUAN MEXICO INC. Membership Management Rules

  • This management rules are the basic terms and conditions to be conformed to as the members approved by RUAN MEXICO INC. (hereinafter referred to as "the Company") conduct business activities.
  • The management rules shall be part of the agreed membership qualification conditions along with other rules.
  • When the Company's members violate the terms specified herein, the Company has the right to restrict or terminate all rights authorized to th members, including but not limited to, warning the member violating the rules and suspending or canceling the license.
  • The Member shall acknowledge and comply with the terms specified in the management rules.
  • The Company has the right to change the business policy and work procedure, and the Member shall always keep in mind of such changes which will be informed or announced through official publications, the Company's official homepage and documents.

Section 1 General Provisions

Article 1 Purpose

The management rules are intended for RUAN MEXICO INC. (hereinafter referred to as "the Company") and the Members (hereinafter referred to as "the Member(s)") to comply with the mutual agreement in selling the Products sold by the Company (hereinafter referred to as "the Products"), so as to settle a sound, reasonable distribution culture and to promote common prosperity of both the Company and the Members.

Article 2 Scope of Application

Unless otherwise specified in a separate agreement regarding the Company's member management, both parties shall conform to the management rules.

Article 3 Applicable Rule

The management rules shall be based on the "Act on the Door-to-door Sales and etc".

Article 4 Subject of Application

The subject under the management rules shall be all the Members registered in the Company.

Section 2 Registration of Members

Article 5 Qualification of Members

Any citizen of South Korea can sign up to be the Member, and will not be restricted from becoming the Member owing to the person's age, educational background, career, job, gender, religion and other physical disabilities. However, any individual set forth in each clause of Article 14, the Act on Door-to-door sales and etc, shall be restricted from registration.

Article 6 Restriction of Registration

Any individual specified in each clause shall be restricted from registration.

  • All Members must register with his/her real name, and the Company shall only accept the qualification of the Member registered. When registered with a borrowed name, the claim of other's rights shall be unaccepted.
  • A new member refers to an individual registered in recommendation and support of the registered Member. The following documents must be submitted to the Company along with the membership application form and contract.

① A copy of ID card (limited to only a copy of identification card or driver's license);
② Certificate of residence, certificate of alien registration and so forth (limited to the ID card accepted in accordance with the applicable laws) in accordance with Clause 8 of Article 6 and a copy of passport;
③ When a foreigner is to register, a copy of ID card per country; and
④ A copy of bankbook with the Member's name.

  • The membership application form must be filled in by the candidate Member, and when an agent fills in the form without consent, such agent shall be responsible for any problem arising from it.
  • Upon membership registration, a married couple can only have one ID.
Article 8 Approval of Qualification for Membership

Qualification for membership has its effect when the Company grants an unique ID to the applicant, and the Company has the sole right to determine whether to approve the qualification or not.

Article 9 Meaning of Qualification for Membership

The Member registered by the Company refers to an independent member performing sales activities at his/her own decision conforming to the sales policy, marketing plan and Product purchasing disclosed by the Company, and the Member is legally responsible for all such activities.

Article 10 Management of Member Information

Upon registration, the Member shall clearly reveal personal information and matters related to recommendation and support in accordance with the procedure of submitting documents set forth by the Company, and the individual submitting such documents shall be responsible for any fault or error. In addition, the Member shall immediately notify the Company when the personal information (address, contact number and etc) and other necessary information are changed. The Member shall be responsible for not notifying such change(s) (for instance, mail return).

Section 3 Obligation of the Member

Article 11 Clear Understanding of Information & Delivery

Upon membership registration, the Company shall provide the Company's rules and Product information, and the Member shall have fully knowledge of all rules and information upon registration. The Member must deliver only the information officially released by the Company, and shall not distort or exaggerate the information released.

Article 12 Sincere Sales Activities

All Members shall sincerely conduct sales activities when he/she is accurately informed and certain of the Products after he/she used such Products, and shall be responsible for all sales activities in relation to sub-members or customers. Furthermore, all Members must inform his/her contact number to the sub-members he/she recommended/supported or the customer (member) who purchased the Products.

Article 13 Training Support & Completion

Since all Members receive allowance by sincerely supporting training for sub-members, the duty of training and managing sub-members should be constantly fulfilled. The training for promotion shall be conducted and the sub-members shall complete such training. The Company may impose sanctions for those not completed the training.

Article 14 Tax Payment

For any income generated from selling the Company's Products, all Members shall sincerely pay taxes in accordance with the tax law of South Korea.

Article 15 Conforming to the Relevant Laws, Ordinances and Rules

Upon registration, all Members shall be deemed to have agreed with the Company's general rules, and in particular, agreed with and signed the 'Membership Management Rules'. Thus, the Members shall conform to all rules, training and management specified by the Company as well as the relevant laws in conducting sales activities.

Section 4 Qualification for Membership & Activities

Article 16 Expiration of Regular Member

Qualification for membership shall be in effect for 6 months from the month after the month of approval (the month of new registration or of purchase) to the end of the sixth month. If there is a Product purchase, it shall be in effect for 12 months from the month after the month of purchasing to the end of the twelfth month.

Article 17 Cancellation of Allowance owing to Subscription Withdrawal

When subscription withdrawal of the contract on purchasing the Products of the withdrawer or the recommended (hereinafter referred to as "return") has occurred, the contract is retroactively terminated, having no reason to pay allowance to the Member. In principle, the allowance already paid shall be redeemed or deducted for it becomes unjust enrichment.

Article 18 Replacement & Return for Different Product

"Replacement" refers to exchanging the Product purchased by the Member from the Company with the same one when there is a defect or fault in such Product for the duration of 3 months. Such Product can be exchanged with the same one in accordance with the quality certification system of 3 months.

"Return for Different Product" refers to requesting for exchange of the Product purchased by the Member from the Company with the different one when there is a defect or fault in such Product for the duration of 3 months. Such Product can be returned to be exchanged with the different one in accordance with the quality certification system of 3 months.

Article 19 Changing Member's Name

In principle, it is impossible to change the Member's name, yet it is exempted under the following circumstance:

  • When inherited owing to death.

Section 5 Prohibited Matters & Termination of the Membership Rights

Article 20 Membership Registration without Consent

The Member shall not register (recommend/support) someone as his/her sub-member without the consent of such person or have such person insured using the copies of ID card and bankbook.

Article 21 Registration of the Person Restricted from Registration

Teachers (faculty included), public officials, minors, students and any other unqualified person shall not be registered as the Member, and when such person is as specified in Article 6 of the management rules, he/she shall immediately or without delay withdraw from membership.

Article 22 Forced Membership Registration or Sales Contract

The Member shall not force the other party to conclude a contract on Product sales, or hinder subscription withdrawal or termination of the contract.

Article 23 Circulation of False or Exaggerated Information

The Member shall not inform a false or exaggerated information, induce sales deals using a deceitful method, deliver a false information on the quality and price of Products, or take actions to mislead others to believe that the Products are far more better or advantageous than their actual conditions. Furthermore, the Member shall not address his/her interpretation or opinion related to the Products, other than the official announcement of the Company.

Article 24 Action to Burden Others & Imposition of Duty

The Member shall not burden the registered Member and the person who wishes to be the Member with whatever reasons, including requesting for a membership fee, supplementary sales item and training fee that exceed the 'Degree defined in the Presidential Decree', and not take actions for imposition of duty.

Article 25 Action related to Subscription Withdrawal

The Member shall not take any of the following actions.

  • An action to damage part of the Product or change the address/contact number (contact interruption) so as to hinder subscription withdrawal or termination of the contract, or to induce delay in using the Product in order to prevent return;
  • An action to return or replace the Product without the given person's consent;
  • An action to register in the other line with the given person's name/borrowed name by intentionally returning the Product or by returning the Product and withdrawing from the membership at the same time, or to induce membership as such; or
  • An action for collective return of Products by intentionally inducing return by other Members for other purposes, such as moving to another company.
Article 26 Unreasonable Purchase or High-Pressure Sales
  • he Member shall not perform high-pressure sales of the Products to others, such as providing the Products without the given person's subscription and charging payment. In particular, the Member shall not sell the Products to sub-members.
  • The Member shall not unreasonably purchase the Product, or induce or burden the sub-members to do so or encourage high-pressure sales for the purpose of promotion or receiving allowance for himself/herself or the person at a higher position.
  • The Member shall not force customers to purchase the Product by phone, fax or computer, even when the customers revealed that he/she has no intention of purchasing the Product.
Article 27 Product Sales using Social Status

The Member shall not force registration of others as sub-members using his/her social status, or encourage membership registration or Product sales by circulating a false information that celebrities or the famous have been registered.

Article 28 Other Abnormal Business Activities including Staying in a Training Camp or Leaving Home

The Member shall not force a person who wishes to be the Member or the Member to leave home for a long period of time or stay in a training camp against such person's will, or sit by and watch or abet similar activities.

Article 29 Misrepresentation as the Company's Executives and Staffs & as if having Exclusive Rights
  • All Members are not employed or in partnership with the Company, and shall not represent the Company or executives/staffs of the Company in any case.
  • The Members shall not represent the Company's Product as the product of other companies, or act as if the Members have an exclusive sales right and/or a local exclusive right.
  • The Members shall not allow a person not registered as the Member to perform sales activities.
Article 30 Exaggerative Advertisement & Negligence of Delivering Information

The Member shall not deliver an inaccurate or exaggerated information regarding the Company's Product and allowance payment rule. Also, the Member shall keep in touch with customers after Product sales and perform the customer service after delivering the Product.

Article 31 Making Someone Want to be Lucky & Inducing Sales

The Member shall not make someone want to be lucky with words that if any person is subscribed, money can be earned, promoting the Company's allowance payment rule, or induce customers' investment or sales by a person who cannot conduct business activities (students, minors, seniors, a person devoid of mental/physical capacity and etc).

Article 32 Act of Using the Member's Personal Information

The Member shall not use the personal information of customers and the Members, unless it is used in accordance with the rules related to Company's membership activities such as calculation of payment and delivery of goods.

Article 33 Mass Media Advertising & Sales through Advertising
  • The Company advertising or producing printed matters via mass media is prohibited.

① The Company related matters or Products shall not be media-advertised without the Company's consent.
② he Company's printed matters (trade name and logo) shall not be manufactured, distributed or sold without the Company's consent.

  • Internet Site related Action Prohibited

① The Company's trade name/logo that can be misunderstood as the Company's official homepage shall not be used without the Company's consent, and the Company's shopping mall shall not be copied.
② The Company's business activities shall not be exaggerated using unconfirmed or insufficient information.
③ Advertisement e-mails using the Company's trade name or Products shall not be sent without the consent of given users.

Article 34 Abuse of the Authority & Negligence of Training Support Duty

The Member shall not use his/her authority to demand sub-members to do some activities that may burden them, or publicize critical comments that may determine qualification for membership or use abusive language. The Member shall sincerely perform supportive activities, and not sit by and watch wrongful business practices or receive only the allowance.

Article 35 Slander of the Company & Members

The Member shall not intentionally malign the Company and other Members at an open or closed place, or shall not defame the Company's or Member's reputation even though the fact is revealed without manipulation.

Article 36 Transfer & Acquisition of the Member's Rights

The Member shall never transfer/acquire the qualification for membership illegally, or transfer/acquire the rights and authority of the sales organization and Members to the third party.

Article 37 Money Transaction, Unfulfillment of Product Delivery
  • The Member shall not use the Company's organization for money transaction without Product delivery, or assist conduct of or merely conduct money transaction without authentic Product delivery.
  • The Member shall check whether the Product is properly delivered or to be delivered after the sales (contract) is concluded, and notify (explain) the Product information (how to use the Product).
Article 38 Public Criticism of the Company or Member-Member

The Member shall not conduct the following actions.

  • Despite the Company's business code or rule, the Member shall not unreasonably claim his/her rights, interrupting the business activities and using force in the Company and training centers, including disturbance, violence and using abusive languages.
  • The Member shall not publicly criticize other Members for whatever reason in relation to illegal money and credit card use.
Article 39 Group within the Organization Prohibited

A group for other purposes (separate projects, promoting friendship and others) within the sales organization shall not be organized with a separate group name, or the purpose of such group shall not have the priority over that of the sales purpose. The Members from specific regions or certain Members shall not be called together to exercise the authority's individual influence.

Article 40 Thoughtless Setup of Other Members

The Member shall not submit a list of false aggregate signatures requesting for a disciplinary action without a concrete evidence, or recommend cancelation of discipline to resolve misunderstanding or conflict after the claim for civil complaints.

Article 41 Unethical Speculative Behavior

The Member shall not conduct any of the following actions.

  • Adultery, leaving home due to family trouble and any unethical conduct among male/female Members shall be considered as personal issues. However, when such act disturbs the sound sales culture and order, degrading the Company's image, or when it greatly impacts other Members as the related Member fails to demonstrate an example, the Company shall terminate the authority of such Member and take other measures.
  • The Member shall not submit false documents in relation to membership registration and sales revenues.
Article 42 Measures taken against Misuse of Cash

The cash income of other Member cannot be replaced with the given person's or other's card, misusing such cash. In accordance with the importance of issue, the qualification of the Member can be suspended or terminated.

Section 6 Operation of Ethics Commission for Members & Suspension of Qualification

Article 34 Operation of Ethics Commission

For proper establishment of business cultures and prevention from damages caused by good faith or will of other Members, the Company shall request for deliberation by the Ethics Commission regarding a critical issue that is expected to result in suspension of qualification for at least 1 month when the Act on Door-to-door sales and the management rules are violated. The Company shall have the right to take various disciplinary actions and those violating the law or rules shall conform to the final decision.

  • The Ethics Commission shall be composed of 5 people or more, including the Company's executives, staffs and Members.

① Apply by attaching evidential documents upon occurrence of violation;
② Request for reply and explanatory materials from the related Member;
③ Check the facts and investigate the actual conditions; and
④ The sanction decided shall be notified to the given Member in writing (e-Document included).
⑤ When a corrective measure in relation to the violation of rules by the Member requires urgency, or when severe crisis is anticipated, the qualification of the given Member can be restricted during the review period until a final decision is made.
⑥ When a discipline is decided, the Company shall notify the related Member(s) or put up a notice at the related center (e-Document included). After 10 days from the date of such notification, it shall be deemed as no claim for objection and it will handled as notified.

Article 44 Type of Sanction
  • Termination of qualification
  • Suspension of qualification
  • Warning
  • Other necessary measures
Article 45 Warning & etc

When the Member violated the prohibited matters or the management rules, or for any minor issues, the Company shall warn the Member up to 2 times (However, when the Member violated the rules again from the date of such warning is notified and delivered, the duration for suspension of qualification can be up to 6 months, and the qualification can be terminated and expelled.)

Section 7 Withdrawal from Membership & Termination of Qualification

Article 46 Suspension of the Member's Qualification (Right)
  • The Member's qualification shall be suspended under the following condition:

① When the Member violates the terms set forth in Section 5 Prohibited Matters (Article 20~42);
② When a product other than the Company's Product or business is recommended or promoted to other Members of the Company;

  • The Company shall have the right to immediately suspend the qualification of the Member without a warning, when the degree of violation is severe. Here, the Company shall notify the given Member of such suspension as it goes into effect.
  • The subjects whose qualification can be suspended include the given Member as well as the Member at the highest position, and the duration for suspension shall be from at least 1 month to up to 6 months.
  • The Member whose qualification is suspended shall be restricted from conducting the following activities:

① Right to purchase and sell the Products;
② Right to recommend/support new Members; and
③ Right to receive allowance (Here, loss of such right refers to termination of the right).

  • The Company shall investigate not only the given Member, but also the superior Members on whether the person was aware of the violation in advance, has sincerely supported training and responsible for management according to the importance of the given issue. The Company may take disciplinary actions against the superior Members of the related Member (for all positions including the immediate superior).
Article 47 Withdrawal from Membership

Any Member has the right to withdraw from membership by notifying the Company (in writing, by website and etc).

Article 48 Termination of Qualification (Expel)
  • The qualification or right of the Member shall be terminated under the following conditions.

① Any person whose rights are suspended for 2 times or more for violating the membership rules;
② When false information is filled in the membership application form;
③ When such person caused a severe sales loss to the Company.

  • The Company shall have the right to terminate the qualification of the Member who has caused a major harm to the Company without the process of suspending the qualification. When the Member's rights are terminated, all legal relations with the Company shall be terminated and the Member's rights shall be invalid.
  • When terminating the Member's rights or qualification, the Company shall investigate not only the given Member, but also the superior Members on whether the person was aware of the violation in advance, has sincerely supported training and responsible for management according to the importance of the given issue. The Company may take disciplinary actions against the superior Members of the related Member (for all positions including the immediate superior).
Article 49 Re-registration of the Members
  • When the Member is automatically withdrawn from membership since he/she has not renewed the qualification, membership can be registered on the day after the date of withdrawal. When the Member is withdrawn (voluntary withdrawal or withdrawal owing to return of Products), new registration is permitted after 180 days from the date of withdrawal.
  • Any Member who lost the qualification due to a discipline may be permanently excluded from membership registration.

Section 8 Notice & Matters other than the Rules

Article 50 Notice

For establishment of proper business cultures, the Company shall announce a list of the Members with warnings, suspended or terminated qualifications in writing or posted on the Company's official homepage.

Article 51 Matters other than the Rules

Matters other than the Rules shall be in accordance with the applicable laws, ordinances and general commercial practices of other companies.

Additional Rules

Article 1 Enforcement & Application

The Rules shall be enforced on the date of notification - 2012.5.4.

II . Business Procedure of RUAN MEXICO INC.

Any Member registered in RUAN MEXICO INC. can purchase the Products with membership price (wholesale price) to gain profits (retail income) from direct sales.


  • All Members must purchase the Company's Products directly from the Company.
  • The Member shall not have an excessive stock of Products for a new purchase, and shall not purchase too much Products, which is beyond the quantity that can be sold to other customers or self-consumed. In such a case, withdrawal (return) of purchases may be restricted in accordance with the Act on Door-to-door Sales and etc.
  • The Company's Members shall accurately identify his/her sales ability or consumption range to purchase the Products.

Replacement of Products & Subscription Withdrawal

Replacement of Products

When customers or the Members point out the defects of Product contents or containers and request for replacement, such Product can be replaced with the same Product, if the request is reasonable in relation to the Product warranty conditions.

2. Unsatisfying Product

When customers or the Members request to return the purchased Product for a refund, it can be refunded if such request is reasonable in relation to the Product warranty conditions. However, in such as case, the customers or Members shall return the Product in accordance with the Act on Door-to-door Sales and etc and submit a subscription withdrawal form in writing to the Company. The Company shall refund the price after deducting the allowance already paid.

3. Excessive Stock (Overstock)

Return of the unused Products that can be resold is permitted, yet the Company has the right to restrict the Members with overstock in withdrawing subscriptions and purchasing the Products. When the Member fails to return the Products on behalf of the customers who reasonably requested for return, the purchaser may request for return directly to the Company, and the Company shall refund the price. The Company shall have the right to indemnity against the Members after the price is refunded to the customers (purchasers).

4. Return Process

The Member who is not a customer shall have the right to withdraw the subscription on the given contract in writing within 3 months after the contract is concluded, unless the Member informed the Company of false inventory or severely damaged the Products so that they cannot be resold. The Member shall prepare a return application form, attach it to a purchase order or transaction details and submit to the Company. After return is approved, the Products can be returned.

III. The Marketing Plan of RUAN MEXICO INC.

Summary of the Marketing Plan

When it comes to the Marketing Plan of the Company, a wide range of multi-level compensation in relation to the sales performance is made for the Members who have independent rights of consuming or selling the Company's Products (hereinafter referred to as "the Member(s)"). Using the Network Sales method, the Products shall be sold to customers, or consumed by the Members or sub-members. Such Marketing Plan is to compensate training and supporting activities regarding the individual's Product consumption, sales and sales of other Members.

Membership Qualification

The Member refers to anyone without obligations or conditions, who is approved by the Company after submitting the documents for membership registration. The consumer Member is the one for simply consuming the Products, and the business Member is the one for gaining income.

2. Membership Benefits
  • Good Products can be purchased.
    Various types of qualitative Products can be purchased with a reasonable price. In addition, they can be used as an opportunity for successful business activities.
  • The Products can be purchased with the discounted membership price.
    The Products manufactured by the Company can be purchased with the discounted price in accordance with the Company's rules.
  • Retail income may be gained.
    The difference between the membership price and the retail price when selling the Company's Products in accordance with the Act on Door-to-door sales and etc, will be the retail income.
  • Support allowance can be received.
    According to the performance of business activities by the Members, including the retail or support activities, diverse allowance can be received. When there is a sales by the sub-members who are registered by the Member, support allowance can be received in accordance with the Company's rules. ※ In case of communication products, related allowance is given only when such products are sold by the given Member.
3. Marketing Plan
  • The total allowance of the Member based on the membership level, support allowance, multi-matching service, allowance for job grade and training allowance shall be 70% of the point value (PV) (When it exceeds 35% of the gross sales, it is automatically deducted).
  • Acquisition of the Membership Level:
    The Company's Rules shall be applied.
  • Support Allowance:
    The Company's Rules shall be applied.
  • Multi-Matching Bonus:
    The Company's Rules shall be applied.
  • Allowance for Job Grade:
    The Company's Rules shall be applied.
  • Promotion Standard:
    The Company's Rules shall be applied.
  • Celebratory Promotion:
    The Company's Rules shall be applied.
  • Training Allowance:
    The Company's Rules shall be applied.
  • Total Sales Allowance Range:
    The Company's Rules shall be applied.

IV. Prohibited Matters for the Company's Members

※ The Company's Members shall not conduct each of the following actions.

Membership Qualification
  • An action to force order of the Products or hinder cancellation of orders;
  • Using a false or exaggerated method, or deceitful method to induce Product orders or hinder subscription withdrawal, or deliver a false information on the price and quality of the Products or mislead others to believe that such Products are significantly superior or advantageous compared to the actual ones;
  • An action to impose money and valuables, or fees that are beyond the terms set forth in the Act/Enforcement Ordinance of Door-to-door Sales and etc in the title and form of membership registration fee, supplementary sales items, sales quantity per individual and training fee;
  • When compensation is offered to the Company's Members for recruiting sub-members, or when compensation is provided without a reasonable cause other than the allowance set forth in the support allowance rule;
  • When changing the address, contact number and so forth for the purpose of hindering subscription withdrawals;
  • When neglecting the duration of handling disputes or complaints, damaging customers;
  • When forcing others to purchase the Product after providing the Product without an individual's subscription and charging for payment, or forcing the sub-members to purchase the Products;
  • When forcing others to purchase the Products or get the related services by phone, fax and computer, even when such person clearly indicated that he/she has not intention of purchasing the Product or getting the services;
  • When the Member forces others to register as sub-members or to purchase the Products using his/her social status;
  • When forcing the person who wishes to be the Member or the Member to take part in the training or education against his/her decision;
  • When the Member pretends to be the Company's employee or allows the person who is not registered as the Member to conduct activities;
  • When the Member sells an individual Product sold to customers with a price that is beyond the terms set forth in the enforcement ordinance;
  • When using the customer's personal information without such person's consent or beyond the range permitted;
  • When transferring or acquiring the status of the Member's organization and the Member; however, it is exempted when the Member status is inherited;
  • When violating the prohibited matters announced by the Fair Trade Commission for protection of customers;
  • When forcing the Members to recruit or support sub-members allocated per person;
  • When providing a false information in relation to the profits the Member is likely to gain;
  • When there is only money transaction without Product delivery or services, or merely money transaction without authentic Product delivery or services;
  • When providing a false information written in the membership book; and/or
  • When deceiving or abetting the prohibited matters described above.

V. Ethical Rules for the Company's Members

As the Member of RUAN MEXICO INC., I will have full commitment as the Member and conform to the matters set forth in the 'Membership Rules' contained in the Company's membership book.

For Reputation & Dignity

As the Member of the Company, I will act on behalf of RUAN MEXICO INC. with sincerity and honesty, and be responsible with self-esteem and community spirit.

2. Conforming to the Ethical & Enforcement Rules

In conducting the Company's business activities, I will be fully aware of the terms and conditions specified in the Ethical Rules, Enforcement Rules and other regulations, rules and guidelines, and conform to them.

3. Acknowledgement of the Marketing Plan & Accurate Delivery of the Plan

I acknowledge that the Company business activities require sincere efforts. I will endeavor to fully understand the information related to the Products and the Company's Marketing Plan before selling the Products and will not spread inaccurate information. I will do my best for constant education and training. If any is violated, I will be responsible for any disciplinary action taken by the Company.

4. Guaranteeing Customer Satisfaction

I will thoroughly identify customer satisfaction on the Products sold and respond to it accordingly, so that the quality of the Company's Products is not distorted, deceitful or exaggerated for customers. In addition, I will make sure that the request for complaints or return by customers is handled with accuracy and promptness in accordance with the procedure specified in the Company's official guideline, fully satisfying the customers.

5. Conforming to the Related National Laws & Company Rules

In conducting the Company's business activities, I will conform to all national laws and ordinances, including the Act on Door-to-door Sales and etc, as well as various rules and regulations established by the Company.

6. Punishing the Violators

When various regulations and rules established by the Company, including the Ethnical and Enforcement Rules, are violated, I will bear all sanctions imposed upon, including compensation for damages to the Company, restriction in purchasing the Products, suspending the membership activities and reception of support allowance and termination of qualification or rights.

Multi-Level Marketing

The following is the explanation of Multi-Level Marketing specified in Clause 1, Article 18 of the Enforcement Rule for the Act on Door-to-door Sales, defined by the Fair Trade Commission.

  • Multi-Level Marketing refers to a gradual, multi-level sales method in which a customer who has used the products sold by the Multi-Level Marketing Company becomes the member of such organization to sell or recommend using the products to other customers, and then such customers become the members again to do the same. It does not go through a typical distribution channel like: Manufacturer → Wholesaler → Retailer → Customer.
  • As customers become members and membership registration gradually spreads, it may damage the customers as it rely on personal/private selling.
  • Multi-Level Marketing, which has been the social issue, may encourage people want to be lucky as the product price is too high compared to its quality, illegally demanding money and valuables from people who wishes to be the member and forcing the existing members to purchase the products or recruit sub-members, where the member income is mostly from just recruiting sub-members.
  • Thus, the Government is implementing the Act on Door-to-door Sales to prevent customers from damages and encouraging them to want to be lucky caused by Multi-Level Marketing, and if violated, related person can be punished accordingly.

When recommended to become the member of Multi-Level Marketing

When a Multi-Level Marketing organization recommended to register as a member, first check the following matters.

  • Before membership registration, first check whether the company that you wish to register is registered in the Fair Trade Commission or the Mayor/Governor in accordance with the Act on Door-to-door Sales and etc. If there is any suspicious matter, hold on for registration and contact the Fair Trade Commission, or the Mayor/Governor(related department), association of businessmen and consumer group.
  • If you wish to be the Multi-Level Marketing member, thoroughly review the products manufactured by such company and check if it is appropriate to act as the member. Since such marketing has no advertisement or distribution margin, the quality and price of products should be competitive.
  • The member should be able to withdraw from membership whenever possible, and the company should have no right to impose whatever conditions in relation to withdrawal.

When purchasing or selling the goods and services from the Multi-Level Marking company

When a Multi-Level Marketing company recommended to register as a member, first check the following matters.

  • Multi-Level Marketing companies are obliged to be insured in the Consumer Damages Compensation Insurance or the Financial Cooperative. When purchasing the goods or services (hereinafter referred to as the "goods/services") from the Multi-Level Marketing company, make sure that such company has concluded a subscription contract in relation to the Consumer Damages Compensation Insurance or the Financial Cooperative, and receive an insurance policy or a certificate. If the Multi-Level Marketing company fails to refund the price of goods/services or refuses to supply the goods/services when there is a subscription withdrawal or the contract is terminated (hereinafter referred to as the "subscription withdrawal"), all or part of the price for goods/services can be compensated in accordance with the insurance conditions set by the insurance company.
  • The member can request for subscription withdrawal and refund the price of goods/services from the sales company when less than 3 months have passed from the date of purchase. The amount of refund is as follows: Subscription withdrawal within 1 month from the date of supply - full price; subscription withdrawal within 2 months and after 1 months from the date of supply - the contract amount in which 5% of the price is deducted; and subscription withdrawal within 3 months and after 2 months from the date of supply - the contract amount in which 7% of the price is deducted.
  • When the member requests for subscription withdrawal and returns the products to the sales company, the price can be refunded within 3 working days. If the sales company fails to make a refund within 3 working days, the amount added with delay charge can be refunded.
  • As a member, when the products are sold to a customer and the customer requests for subscription withdrawal within 14 days from the date of contract conclusion (when delivery of goods or services is later than the date of contract conclusion, within 14 days from the date of goods or services delivery), the price of goods or services should be refunded.

What is an illegal Multi-Level Marketing Organization?

The following companies indicate illegal Multi-Level Marketing organizations. If the companies that you know are as described below, report them to the city/province, Fair Trade Commission, headquarters of the police, association of businessmen and consumer groups.

  • There is no or unclear Multi-Level Marketing business license and number.
  • The information related to calculating and providing support allowance is not disclosed.
  • A Multi-Level Marketing member license, membership book and others are not issued or ones with insufficient information are issued.
  • Expensive products where the sales prices is over 1,300,000 won (VAT included) are sold.
  • There is no clear rule on returning and refunding products, or such rule is not conformed to.
  • The ratio of support allowance is excessively high (It exceeds 35% of the membership price of goods/services).
  • It induces membership registration using violence, pressure and other forceful, threatening methods.
  • As a membership fee, it demands 10,000 won or more, or forces to purchase products that are more than 50,000 won as the condition for membership registration.
  • It forces the members to purchase supplementary sales items of more than 30,000 won.
  • Unlike the standard on providing support allowance notified upon membership registration, it maintains membership and the support allowance is paid only when the sales quantity per person is achieved.
  • Income is generated only by registering people.
  • The address and contact information of office is intentionally and frequently changed.
  • The products are sold with significantly higher prices compared to those of similar products, or only money transaction is conducted.