A Study on Improvements for Banning Advertisements That Do Not Disclose Economic Relationships Between Recommenders/Endorsers and Advertisers on Social Media : Including whether the principle of statutory reservation is violated

The Fair Trade Commission classifies undisclosed advertising as a type of deceptive advertisement under the Act on Fair Labeling and Advertising. The “Guidelines on Review of Labeling and Advertising Regarding Recommendations and Endorsements” specifically mandate the disclosure of any economic relationship between advertisers and endorsers/recommenders. However, the number of suspected violations regarding the placement and manner of disclosing these economic relationships has been increasing, indicating that the overall number of suspected violations related to undisclosed advertising has not decreased. Therefore, it is warranted to enhance the enforcement of these regulations. In particular, it is necessary to impose penalties on endorsers/recommenders who conceal their economic ties with advertisers and independently engage in recommendation or endorsement activities. Nonetheless, since there are cases where individuals in ordinary positions may receive minor economic benefits or where small-scale advertisers are involved, it is crucial to appropriately adjust the scope of those obligated to disclose these relationships. Furthemore, the current regulations prohibiting undisclosed advertising do not reflect the characteristics of different platforms and are uniformly applied, leading to potential reverse discrimination. Therefore, when prohibiting undisclosed advertising, it is important to consider the unique characteristics of each platform and to seek review standards that ensure consistency with other advertising regulations. The current “Guidelines on Review of Labeling and Advertising Regarding Recommendations and Endorsements” impose an obligation to disclose economic relationships between advertisers and endorsers/recommenders, but there are legal issues regarding the enforceability of this obligation. Therefore, it is essential to establish a clear legal basis at the legislative level for the obligation to disclose economic relationships between advertisers and endorsers/recommenders. This would ensure predictability in governmental actions, guarantee legal stability, and prevent arbitrary enforcement by the government.