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Marketing 2018 Ferrell/Pride Expert Verified
The purpose of this Act is to prevent unfair labels and advertisements for products and services that deceive or mislead consumers in labeling and advertising, and to promote provision of correct and useful information to consumers, thereby establishing fair trade order and protecting consumers. Distinguishing between Labeling and AdvertisingThe term "labeling" means characters or figures that are written or affixed on a container, package, or a printed matter posted in a place of business with regard to the contents of products and services or a container or package representing features of products. The term "advertising" means activities that are conducted to widely publicize the contents of products and services, terms and conditions of transactions, etc. to consumers through newspapers, broadcasting, magazines, samples, Internet, or signboards. The reasons for regulating unfair Labeling and AdvertisingAn asymmetry in information arises between business entities and consumers, because business entities can obtain not only information about their own products but also various kinds of information, while individual consumers are unable to access adequate information necessary for making wise decisions in terms of economy. Under such asymmetry, business entities tend to fabricate and exaggerate information which is advantageous to them, and conceal or whitewash information which is disadvantageous to them, providing distorted information, thereby inflicting damage to consumers. Futhermore, business entities are apt to concentrate on misleading consumers with unfair advertising, rather than fairly competing with one another, only to create a problem of disturbing the operation of market economy. DetailsProhibited unfair labeling or advertising are classified into four types: (1) False or exaggerated labeling or advertising; (2) deceptive labeling or advertising; (3) unfairly comparative labeling or advertising; (4) slanderous labeling or advertising.
Where a business entity engages in unfair labeling or advertising, the KFTC may issue a corrective order, order to publish the fact that the entity received a corrective order, or impose penalty surcharges (up to the amount of sales multiplied by 2% or 500 million won), on the business entity. Also the KFTC may file a criminal charge against the business entity or its employees.
Key Case
ㅇ The KFTC issued a corrective order and imposed 75 million won as penalty surcharges against 6 air purifier manufacturers for unfair labeling and advertising (Aug. 2018). ㅇ The KFTC imposed penalty surcharges against the unfair labeling and advertising practice of Audi Volkswagen (Jan. 2017). Implementing Policies on Fair Labeling and AdvertisingDisclosure of Material FactsThe KFTC may publicly notify matters that business entities, etc. shall include in labeling or advertising to expand the scope of information that will be provided to consumers for reasonable selection of commodities, and to prevent consumer damage occurring due to lack of information.
Key Case □ Failure of disclosing the fact about providing material benefits ㅇ The KFTC imposed sanctions against Instagram influencer advertisements (Nov. 2019).
Verification of Details of Labels and Advertisements
Temporary Suspension Order
Enhancing Accessibility to Consumer Safety Information and Responds to Consumer Safety IssuesThe KFTC provides recall information for 11 types of products, such as food, industrial products, cosmetic products through the Integrated Consumer Support System (Haengbok Dream). Haengbok Dream WebSite
(http://www.consumer.go.kr) The KFTC provides recall information for 11 types of products, such as food, industrial products, cosmetic products through the Integrated Consumer Support System (Haengbok Dream). The KFTC holds Business Consultative Group meetings for the early detection of the signs of potential injury, the cooperation of business in injury prevention, and early product recall. The KFTC is currently holding Business Consultative Groups in 8 sectors, such as large electronic product, large supermarket, hygiene product, automobile, and water purifier. |