The Korea Fair Trade Commission (the "KFTC") has amended its Guideline on Labels and Advertisements in relation to Recommendations and Guarantees (the "Guideline") to provide additional guidance on "influencer marketing," which became effective on September 1, 2020.  This amendment was spurred by the view that posts by celebrities and social media influencers (“Influencers”) without sufficient disclosures constitute a form of deceptive advertising, a type of prohibited practice under the Fair Labeling and Advertising Act.  The amended Guideline describes what kind of conduct could constitute such deceptive advertising and how the Influencers should disclose that they have an economic interest in their posts. 

Following this amendment, the KFTC published “Guideline on Recommendations and Guarantees: Handbook on the Disclosure of Economic Interests” (the “Handbook”) to assist with interpreting the Guideline.  The Handbook contains numerous examples and visual aids illustrating the KFTC's requirements and includes a Q&A section comprised of frequently asked questions and the KFTC's answers. 

Please refer to the attached official Korean version of the Handbook for further information. 

Notable features of the Handbook include the following: 

1.   Definition of “economic interests”

“Economic interests” that require disclosure include not only financial compensation such as cash, gift certificates, discount coupons, and “points” programs as well as free products, free loans, and discounts, but also profit-sharing through collaborations or joint purchases, partnerships, and employment relationships. 

2.   Disclosure language

Disclosures must be in the same language as the main recommendation or guarantee (e.g., social media post), and the Handbook makes clear that even if the recommendation or guarantee itself is in a foreign language, if it has been targeted to Korean consumers (e.g., by using Korean-language subtitles), the disclosure must also be in the Korean language. 

3.   Posts published prior to the effective date of the amended Guideline

The Handbook makes clear that posts published prior to the effective date of the amended Guideline (September 1, 2020) are still subject to the requirement in the amended Guideline to clearly disclose any economic interests, since the September 1, 2020 amendments had merely clarified and specified the previous Guideline’s requirements to clearly disclose economic interests in influencer marketing posts.   

Because the Handbook provides detailed and specific examples of appropriate disclosure phrases and wording for each type of influencer marketing platform, companies considering influencer marketing should carefully review the content of the Handbook. 

With more companies and consumers relying on influencer marketing, we expect the KFTC to continue increasing its close scrutiny of influencer marketing and enforcement against influencer marketing-related violations.  We advise our clients to take this as an opportunity to (i) review the existing influencer marketing practices and make any corrections as necessary, (ii) review contracts with influencers, as well as with marketing and PR agencies handling influencer marketing projects, to ensure their compliance, and (iii) update internal influencer marketing rules to reflect the principles set forth in the Guideline and the Handbook. 

[Korean version]