Act on Fair Labeling and Advertising

The Act reaches business operators in industries that rely on labeling and advertising to sell products or services, such as food, cosmetics, and pharmaceuticals; finance and insurance; real estate and sales of housing units; e-commerce and platforms; and manufacturing and distribution.

It applies regardless of size, from sole proprietors to large enterprises, and conduct by a business operators' association that unfairly restricts the advertising of its member operators is also subject to regulation.

The Act on Fair Labeling and Advertising imposes the following obligations on business operators.

First, the obligation to refrain from unfair labeling and advertising.

A business operator must not engage in labeling or advertising that is false or exaggerated, deceptive, unfairly comparative, or slanderous.

Second, the obligation to disclose material information.

Material information designated by the Korea Fair Trade Commission must appear in labeling and advertising.

Third, the obligation of substantiation.

Factual claims made in labeling and advertising must be capable of substantiation at any time, and when the Korea Fair Trade Commission requests supporting materials, the operator must submit them within 15 days.

Failure to comply may lead to an order to suspend the advertising.

Violations of the Act on Fair Labeling and Advertising arise frequently, not only in large-scale advertising campaigns but also in routine marketing activities.


- Advertising that exaggerates efficacy or effects or distorts clinical results

- Advertising that uses superlative expressions without objective grounds

- Price advertising that inflates discount rates or regular prices

- Advertising that omits important conditions or restrictions or buries them in small print

- Undisclosed paid advertising that conceals the fact that the content is a review or sponsored-tester advertisement

When unfair labeling or advertising is clearly suspected and consumers or competing business operators face a risk of irreparable harm, the Korea Fair Trade Commission may order the business operator to suspend the labeling or advertising in question immediately.

A party that objects to a temporary suspension order must file an objection with the Korea Fair Trade Commission within 7 days of receiving the order.

When unfair labeling or advertising is confirmed, the Korea Fair Trade Commission may order the following corrective measures.

Public announcement of a corrective order and corrective advertising can directly harm brand credibility, so the disposition itself may cause substantial business losses.

A business operator that has engaged in unfair labeling or advertising faces a penalty surcharge of up to 2% of the relevant sales revenue.

Where there is no sales revenue or it is difficult to calculate, a penalty surcharge of up to 500 million won applies.

In setting the penalty surcharge, the Commission weighs factors such as the content and degree of the violation, its duration and frequency, the scale of the profit obtained, and the operator's efforts to prevent or compensate for consumer harm.

A person who engages in unfair labeling or advertising, or who fails to comply with a corrective order, is subject to imprisonment for up to 2 years or a fine of up to 150 million won.

When a representative, agent, or employee of a corporation commits the violation, the same fine may be imposed on the corporation as well as the individual actor.

A consumer or competing business operator that has suffered harm from unfair labeling or advertising may claim damages from the business operator.

The business operator cannot escape liability by arguing the absence of intent or negligence, and even when the amount of damages is difficult to calculate, the court may recognize a reasonable amount based on the results of the pleadings. The resulting liability risk is considerable.

Expressions such as "verified by clinical results" and "recommended by experts" may be treated as false or exaggerated advertising when no supporting materials back them up.

When the Korea Fair Trade Commission requests substantiating materials, the operator should review the matter with a professional without delay.

When material information that affects a consumer's purchasing decision, such as discount conditions, exclusions, and validity periods, is separated from the main text or shown only in small print, the conduct may constitute deceptive labeling and advertising.

Failing to clearly disclose that content is influencer or sponsored-tester advertising constitutes deceptive advertising.

The same holds when the content is presented in a way that makes it impossible to recognize as advertising or is disguised as a comment or review.

Once a Korea Fair Trade Commission investigation has begun, temporary suspension orders, corrective measures, and penalty surcharges follow quickly.

Heading off the risk through advance review before advertising is executed is the most effective response.