[Consultation] “Guidelines for Review of Indications and Advertisements Regarding Recommendations, Guarantees, etc.” Legal consultation regarding advertising obligations.

Law firm Veat is providing opinions regarding whether it has a duty to disclose economic interests in accordance with the “Guidelines for Review of Display and Advertising of Recommendations · Guarantees, etc.” issued by the Fair Trade Commission and regarding the form of contract and response measures that may be exempt from the obligation.

The Fair Trade Commission implemented the revised “Guidelines for Review of Display and Advertising of Recommendations · Guarantees, etc.” as of September 1, 2020. This guideline stipulates methods for advertisers and guarantors to indicate relevant economic interests when content such as photos and videos are used.

Accordingly, Company A, which operates using a business model involving collective purchases through influencers, requested advice regarding the disclosure obligations for advertising and other displays based on the influencer’s collective purchase format.

Law firm Veat, based on the guideline manual of the Fair Trade Commission regarding the “Guidelines for Review of Display and Advertising of Recommendations · Guarantees, etc.”, comprehensively reviewed the answers obtained by directly inquiring to the Fair Trade Commission and, in particular, considering ① cases where collective purchasing is facilitated, ② cases where profits are shared beyond simply “collective purchase,” and ③ cases where an influencer launches a PB brand directly, providing opinions on ▲whether Company A has a duty to disclose economic interests and the method of disclosure, and ▲the form of contract with the influencer that may be exempt from disclosure obligations, and ▲response measures.

If the advertisement is deemed unfair, the business operator may be subject to a fine of up to 2% of related revenue or income, or up to 5 billion won.

Due to the implementation of the revised “Guidelines for Review of Display and Advertising of Recommendations · Guarantees, etc.” of the Fair Trade Commission, which has strengthened advertising disclosure standards, public concern is arising regarding “back advertising” and advertising conducted through SNS. If the advertisement is deemed unfair, the relevant business operator may also be subject to a fine of up to 2% of related revenue or income, or up to 5 billion won. Therefore, it is necessary for companies to procure standard contracts when advertising on SNS and online platforms and to proactively prepare for legal disputes through post-monitoring.

Law firm Veat provides advisory and consultative legal counsel as a legal representative for various SNS and online platform clients, based on its experience providing legal counsel.

If you need advice regarding advertising disclosure obligations and responses to the Fair Trade Commission, please contact Law firm Veat.

Thank you.