On June 9, 2026, the Korea Fair Trade Commission (“KFTC”) announced that amendments to the implementing decrees of the Door-to-Door Sales Act, the Display Advertising Act, and the Installment Transactions Act were approved at a Cabinet meeting. The amendments will take effect on July 1, 2026, together with revised administrative fine guidelines pre-announced in March. The amendments materially tighten the penalty framework by raising the surcharge ceiling for repeat violations, curtailing discretionary fine reductions, and overhauling the base-rate schedule under the Display Advertising Act. Key details are set out below.
|
1.
|
Background
Under the Door-to-Door Sales Act, the Display Advertising Act, and the Installment Transactions Act (collectively, the “Consumer Protection Acts”), the KFTC may impose administrative fines on businesses that engage in unfair conduct in consumer-facing transactions. Under the current regime — as elaborated in the relevant implementing decrees and administrative fine guidelines — the surcharge maximum for repeat violations was capped at 50% of the base fine, and businesses could receive discretionary reductions of up to 30% for consumer-harm compensation efforts. These limits have been criticized as insufficient to deter repeat offenders.
The present amendments reflect this policy concern and are consistent with the KFTC’s broader effort to strengthen fine practices, including the revised Administrative Fine Guidelines that were amended and made effective on April 30, 2026.
|
|
(1)
|
Increased Surcharge Ceiling for Repeat Violations
The implementing decrees raise the maximum repeat-violation surcharge from 50% to 100% — a twofold increase — of the base fine across all three Consumer Protection Acts. In parallel, the revised guidelines extend the lookback period for prior violations from three years to five years and introduce a graduated surcharge schedule that increases the surcharge based on both the number of prior enforcement actions and a weighted-score tally reflecting the severity of each prior disposition.
|
Revised Surcharge Schedule for Repeat Violations (All Three Acts)
|
Prior Violations (5-year lookback)
|
Weighted Score
|
Surcharge Rate
|
|
1 or more
|
2 or above
|
Over 40% up to 50%
|
|
2 or more
|
3 or above
|
Over 50% up to 70%
|
|
3 or more
|
5 or above
|
Over 70% up to 90%
|
|
4 or more
|
7 or above
|
Over 90% up to 100%
|
* Weighting by disposition type: Warning (0.5), Corrective Recommendation (1.0), Corrective Order (2.0), Administrative Fine (2.5), Criminal Referral (3.0)
|
(2)
|
Reduced Discretionary Mitigation
The amendments also substantially curtail the discretionary reductions available to businesses. The maximum mitigation credit for consumer-harm compensation is reduced from 30% to 10% across all three Consumer Protection Acts. Under the Display Advertising Act guidelines specifically, the prior framework — which allowed separate 10% reductions for cooperation at the investigation stage and cooperation at the deliberation stage, totaling 20% — is replaced by a single credit of up to 10%, available only when the business cooperates throughout all stages of the investigation and deliberation proceedings and admits the facts of the violation by the close of proceedings. Additionally, the mitigation provision for businesses that took substantial precautions to avoid violations — for example by obtaining external legal advice — is deleted entirely. This change resolves the longstanding debate over whether a business’s ordinary compliance obligations should constitute grounds for fine reduction.
|
|
(3)
|
Revised Base-Rate Schedule Under the Display Advertising Act
The Display Advertising Act guidelines introduce a scoring-based system for classifying the severity of violations. In addition, the amendments raise the minimum base-rate levels for serious and very serious violations by establishing separate scoring thresholds for those categories. The revised base-rate schedule is set out below.
|
Revised Base-Rate Schedule for Unfair Display/Advertising Acts (Display Advertising Act)
|
Severity Level
|
Scoring Threshold
|
Current Base Rate
|
Revised Base Rate
|
Revised Base Amount
|
|
Very Serious
|
2.4 or above
|
1.6%~2.0%
|
1.8%~2.0%
|
KRW 450 million to KRW 500 million
|
|
Serious
|
1.6 to under 2.4
|
0.8%~1.6%
|
1.5%~1.8%
|
KRW 350 million to under KRW 450 million
|
|
Less Serious (upper)
|
1.3 to under 1.6
|
0.1%~0.8%
|
1.0%~1.5%
|
KRW 250 million to under KRW 350 million
|
|
Less Serious (lower)
|
Under 1.3
|
0.1%~0.8%
|
0.1%~1.0%
|
KRW 5 million to under KRW 250 million
|
|
3.
|
Why This Matters
These changes meaningfully raise administrative fine risk and reduce the ability to offset penalties through post-violation conduct.
|
|
(1)
|
Businesses with prior enforcement histories face higher fine exposure.
The lookback period has been extended from three to five years, meaning violations that previously fell outside the repeat-violation window may now trigger surcharges. Businesses that received any corrective disposition — including warnings — within the past five years should pay close attention to their elevated surcharge risk.
|
|
(2)
|
Fewer and smaller mitigation paths are available.
The maximum consumer-harm compensation credit drops from 30% to 10%; under the Display Advertising Act, the conditions for cooperation-based credits have been tightened; and the due-diligence mitigation provision has been deleted entirely. Businesses should strengthen preventive compliance programs and internal policies rather than rely on discretionary reductions after the fact.
|
|
(3)
|
The effective minimum fine level rises for serious violations under the Display Advertising Act.
Because the base rates are now differentiated by scoring thresholds, pre-assessment of violation severity becomes more important for fine-risk management under that statute.
|
Taken together, these amendments are consistent with the KFTC’s broader policy direction toward stronger deterrence through administrative fines. In light of this, businesses should consider reviewing and updating their compliance programs with a focus on proactive internal risk assessment and preventive effectiveness.
[Korean Version]
