Fair Labeling and Advertising Act Lawyer | What triggers a case and how to respond at each stage

Fair Labeling and Advertising Act | Four Categories of Prohibited Advertising

Article 3 of the Act on Fair Labeling and Advertising (표시광고법 제3조) lists the conduct the KFTC treats as unlawful labeling or advertising. Most enforcement actions are built around classifying the advertisement into one of these four categories, so understanding which category is alleged is the first step in preparing a response.

Fair Labeling and Advertising Act | How a KFTC Investigation Actually Starts and Proceeds

Most cases begin either from a consumer report, a competitor's complaint, or the KFTC's own periodic monitoring of online and broadcast advertising. Understanding the stage you are at changes what kind of response is useful.

Preliminary Fact-Finding (사실조사) and the Request for Materials

The KFTC typically opens with a written request for materials — the advertisement's underlying data, sales figures, and internal approval records. This is not yet a finding of violation, but the materials submitted here become the primary evidence the case officer relies on later, so incomplete or defensive responses at this stage are difficult to walk back.

Statement of Opinion and the Right to Be Heard

Before the KFTC issues a resolution, the company is generally given an opportunity to submit a written opinion and, in Commission-track cases, to appear before the Fair Trade Commission's deliberation. This is where objectively verifiable substantiating data for the advertising claim (such as test reports or third-party certifications) has the most persuasive weight.

The Substantiation Burden Often Shifts to the Advertiser

In practice, once the KFTC questions whether a specific claim is verifiable, the advertiser is effectively expected to produce the objective data supporting that claim (표시광고법 제5조). Advertisers who did not retain testing data, source studies, or the basis for comparative claims at the time the ad ran are at a significant disadvantage during this stage.

Fair Labeling and Advertising Act | Corrective Orders, Surcharges, and Criminal Referral

The consequences of a finding under the Act range from a public corrective order to a monetary surcharge, and in aggravated cases to a criminal referral. Which sanctions are combined depends on the scale of the advertising, the harm to consumers, and whether the conduct is repeated.

Corrective Order and Public Disclosure

The KFTC can order the advertiser to stop the advertisement, correct it, or publicize the fact of the correction (표시광고법 제7조). Because the order itself, once finalized, is disclosed and can affect brand reputation, many companies focus their defense on narrowing the scope of what must be publicly corrected rather than contesting the underlying finding outright.

Surcharge Calculated on Related Sales

A surcharge of up to a statutorily set percentage of sales revenue attributable to the advertised goods or services during the relevant period can be imposed (표시광고법 제9조). The scope of what counts as 'related sales' — including which product lines and which time period are included — is frequently the most contested factual issue, since it directly changes the surcharge amount.

Criminal Referral for Serious Violations

For advertising found to seriously mislead consumers or cause significant harm, the KFTC can refer the matter for criminal prosecution, exposing the responsible individuals and the company to criminal penalties (표시광고법 제17조). Because this is a separate criminal track from the administrative sanction, a company facing both should coordinate its administrative response with the criminal defense strategy from an early stage.

Fair Labeling and Advertising Act | Online, Influencer, and Comparative Marketing Are Highest-Risk Areas

Certain marketing formats attract disproportionate KFTC attention because they are easy to monitor at scale and prone to ambiguous substantiation.

Undisclosed Sponsored Content and Influencer Marketing

The KFTC's guidelines on recommendation and endorsement advertising require clear disclosure when an influencer or reviewer has received payment or free products in exchange for a review (표시광고법 제3조 및 관련 심사지침). Failure to disclose this economic relationship is treated as a form of deceptive advertising even if the product claims themselves are accurate.

Price and Discount-Rate Advertising

Advertising a discount off an inflated 'original price' that was rarely, if ever, actually charged is a recurring enforcement target, since it misrepresents the real benefit to the consumer. Companies running frequent promotional pricing should be able to show the actual sale history supporting the claimed baseline price.

Fair Labeling and Advertising Act | From Receiving a Request for Materials to Case Resolution

Fair Labeling and Advertising Act | How Fees Are Structured for These Cases

※ Costs vary depending on case complexity and specific circumstances; exact fees will be provided during consultation. No specific outcome is guaranteed.

Fair Labeling and Advertising Act | Self-Check Before You Respond

Frequently Asked Questions

Official References

• Korea Law Information Center — https://www.law.go.kr
• Easy-to-Find Everyday Legal Information — https://easylaw.go.kr
• Korea Legal Aid Corporation — https://www.klac.or.kr
• Ministry of Employment and Labor — https://www.moel.go.kr