An amendment to the Guidelines on Review of Labeling and Advertising Regarding Recommendations and Endorsements (the “Amended Guidelines”) took effect starting from September 1, 2020.  The Amended Guidelines provide a much more detailed guidance on the necessary disclosures when celebrities and social media influencers (“Influencers”) recommend or endorse certain products on their social media platforms such as YouTube or Instagram (“SNS”).

The Korea Fair Trade Commission (the “KFTC”) takes the view that posts by Influencers without sufficient disclosures constitute a form of deceptive advertising, a type of prohibited practice under the Fair Labeling and Advertising Act.  On April 29, 2020, the KFTC had made an advance notice of a proposed amendment to the Guidelines, which provided a much more detailed guidance on the necessary disclosures.  While nearly identical to the advance notice released on April 29, notable updates include (i) the English word “sponsor” as an example of a foreign-language disclosure that would not be permissible for a Korean-language post, and (ii) an exception to the principle that videos should include disclosures repeatedly throughout the video, applicable to video posts by “well-known personalities.”

A summary of the Amended Guidelines is as follows. 

1.   General Principles for Disclosing Economic Interests

The Amended Guidelines introduced a set of general principles and specific examples for disclosing economic interests relating to influencer marketing, which are applicable to all types of social media.  The disclosure should be placed near the sponsored content by using color or size in a readily noticeable manner to consumers.  Further, economic interests such as economic compensation, discounts or sponsorship should be displayed in a way that is readily noticeable to consumers.  Additionally, the same language should be used for disclosure statements and for recommendation or endorsement, except where consumers can readily understand the disclosure statements in light of the overall content even if they are provided in a foreign language. 
 

2.   Examples of Proper Disclosure by Each Type of SNS Platform

• Text-based SNS platforms (e.g., online blogs and cafés): The disclosure should be made easily distinguishable from the sponsored content by placing it at the beginning or end of the sponsored content.  No additional action should be required to view the disclosure, such as clicking on a “see more” link. 

• Image-based social media platforms (e.g., Instagram): The disclosure should be placed within the image/photograph, but if the image is hard to distinguish from the supporting text, the disclosure may be placed at the beginning of the text or as the first hashtag to the post.

• Video-based social media platforms (e.g., YouTube): The disclosure should be made clearly distinguishable by including it in the title of the post or at the beginning and end of the video, as well as repeatedly throughout the video so that consumers who only watch a part of the clip may easily notice the related economic interests.

• Live-streaming social media platforms (e.g., AfreecaTV): The disclosure should be made in accordance with the above principles for video-based SNS platforms, and when it is impossible to add subtitles, etc., in real time, the disclosure should be expressed in spoken form.

However, with respect to video-based and live-streaming SNS platforms, where “well-known personalities” (defined as those well-known or influential to consumers due to their accomplishments in a specific area, such as celebrities, artists, athletes, doctors, professors, religious leaders and bloggers) make a recommendation or endorsement by intentionally mentioning or showing a specific product or brand name in the video, the required disclosures may be placed only at the beginning and end of the video, and need not be made repeatedly throughout the video as is required in principle for such platforms.
 

Companies planning to engage in influencer marketing should make sure their Influencers undertake disclosures in accordance with the Amended Guidelines.  Companies should also carefully review the full text of the Amended Guidelines so that the proposed changes are reflected in existing or future agreements or guidelines with Influencers or marketing agencies, as well as in internal social media marketing guidelines that are used for training employees.