On August 21, 2024, the Korea Fair Trade Commission (“KFTC”) issued an advance notice of the proposed amendments to its Guidelines on Review of Labelling and Advertisements Regarding Recommendations and Endorsements (“Guidelines”) regarding social media influencer marketing that changes, among others, the location of economic interest disclosures for sponsored content on social media. The proposed amendments, for which the public comment period ends on September 9, aim to address problems that have surfaced during its application and to address major violations identified during the KFTC’s annual monitoring of advertisements on social media.
Key details of the proposed amendments are as follows:
|
1.
|
Require Economic Interest Disclosures to Be Made in the Title or at the Beginning of the Post on Text-Based Social Media
Under the current Guidelines, economic interest disclosures for sponsored content on text-based social media are required to be made at the beginning or at the end of the post. However, as noted in the results of the KFTC’s monitoring in 2022 and 2023, there have been repeated consumer complaints on the difficulty of recognizing such disclosures on smaller (e.g., mobile phone) screens, as the disclosures were often hidden behind a “see more” link.
To address this issue, the proposed amendments instead require the economic interest disclosures to be made in the title or at the beginning of the post, which will allow consumers to more easily identify that the post is a sponsored content. The proposed amendments also (i) require disclosures in the post title to be appropriately drafted so that the entire disclosure statement is visible without requiring additional clicks or scrolling, and (ii) require disclosures at the beginning of a post to be made easily recognizable by distinguishing the disclosure statement from the content (e.g., by using a bigger font size or a different color).
|
|
2.
|
Make Clear That the Use of Conditional or Unclear Expressions in Economic Interest Disclosures Is Not Acceptable
The proposed amendments add to the list of examples of unclear disclosure statements those that use conditional or unclear expressions (e.g., “may receive a certain commission”) because such expressions could suggest that the content is not a sponsored content. As the Guidelines require clear disclosure of economic interests in a way that is easily recognizable to consumers, companies that engage in influencer marketing should make sure to improve any expressions in the economic interest disclosure statements that can be interpreted as being conditional or unclear.
|
|
3.
|
Make Clear That the Economic Interest Disclosures Are Required Even If Monetary Compensation Is Paid Conditionally in the Future
Because the current Guidelines can be interpreted as economic interest disclosures being required only if monetary compensation is received in advance of the posting, the proposed amendments specify that economic interest disclosures are required even if monetary compensation is paid conditionally in the future. The proposed amendments do this by adding to the list of examples of disclosure statements that could influence the credibility of the sponsored content two recently popular modes of influencer marketing, which involve (i) payment of monetary compensation based on sales made using a discount code or through a purchase link in the sponsored post, and (ii) payment of the price of a product that was first purchased by an individual after the individual posts a product recommendation on his/her own social media account or in the form of a customer review on an online shopping platform. Therefore, companies that engage in such marketing practices should make sure that the economic interest disclosures are required even for social media content that involves conditional future payment of monetary compensation.
|
Going forward, we expect the KFTC to continue increasing its scrutiny of influencer marketing and enforcement against influencer marketing-related violations. This is based on the KFTC’s Enforcement Plan for 2024, which expresses its commitment to regulate deceptive or surreptitious advertisements on social media, and sanctions imposed in July against companies for recruiting social media influencers to post sponsored content that failed to clearly disclose the economic interests or that falsely suggested that the influencers had actually used the products. The sanctions included corrective orders, orders to make a public announcement of the violation and administrative fines.
Companies that engage in influencer marketing are advised at this time to review the details of the proposed amendments, review their existing influencer marketing practices and make any corrections as necessary, and accordingly update internal influencer marketing rules that are used for training employees.
[Korean Version]
