Hello, this is Cheongchul Law Firm.

"You've been selected for a government support program — you only need to pay your own share." Damage from online advertising agency contracts signed after calls like this keeps increasing. Recently, the Korea Fair Trade Commission (KFTC) referred 18 online advertising agencies for criminal investigation. In this post, we outline the scam tactics identified by the KFTC and what you must check before signing.

[Table of Contents]

1. KFTC refers 18 online advertising agencies for investigation

2. Four tactics used by suspected illegal ad agencies

3. Companies that only change their trade name — targeted as organized operations

4. A three-point checklist to prevent damage

5. If you have already been harmed — reporting and legal action

KFTC refers 18 online advertising agencies for investigation

The Korea Fair Trade Commission referred 18 online advertising agencies against which numerous complaints had been filed for criminal investigation. Since the Task Force on Illegal Online Advertising Agency Practices — joined by the KFTC, the National Police Agency, and the Ministry of Science and ICT — was launched in late 2024, the cumulative number of agencies referred for investigation has reached 55. The task force refers suspected illegal advertising agencies for investigation every quarter. In other words, this is not a one-off crackdown but an ongoing monitoring and investigation system.

Four tactics used by suspected illegal ad agencies

The KFTC identified the following four main tactics used by suspected illegal advertising agencies.

1. Posing as a government support program — telling businesses they have been selected for a government support program and misleading them into believing they only need to pay their own share.

2. Lump-sum charges for five years without consent — promising small monthly advertising fees for one year, then charging five years' worth of fees at once without consent.

3. Failure to honor revenue or full-refund guarantees — guaranteeing increased sales or a full refund, then failing to deliver.

4. Excessive penalty demands — demanding excessive early-termination penalties when cancellation is requested right after signing.

Many businesses suffer losses after signing based solely on promises of "government support" or "guaranteed sales." Depending on the circumstances, such conduct may constitute fraud under Criminal Act Article 347, and violations of fair trade laws may also be reviewed depending on the contract terms.

Companies that only change their trade name — targeted as organized operations

The investigation identified numerous companies that use the same trademark, or share the same representative and address while operating under a changed trade name. The KFTC treats these as organized operations and included them among its priority investigation targets. When reviewing a contract, checking the company name alone is not enough — you should also verify the representative, business address, and business registration number to see whether the entity is the same as one previously found problematic.

A three-point checklist to prevent damage

To prevent damage from illegal online advertising agencies, keep these three points in mind.

1. Never pay before receiving the contract — paying without a written contract makes it extremely difficult to prove the terms you were promised.

2. Always review the contract terms, including penalty clauses — confirm the contract period, total payment amount, and how early-termination penalties are calculated, all in writing.

3. Keep all evidence — call recordings, text messages, and the contract — verbal promises of "government support" or "guaranteed sales" must be preserved in recordings or messages to be contested later.

If you have already been harmed — reporting and legal action

If you have suffered damage or suspect illegal conduct, you can file a report with the Online Advertising Agency Fraud Report Center on the Korea Internet Advertising Foundation website. In addition, if you face excessive penalty demands, a standard-terms clause imposing unfairly excessive damages on the customer may be void under Article 8 of the Act on the Regulation of Terms and Conditions, and if the agreed liquidated damages are unreasonably excessive, the court may reduce them under Civil Act Article 398(2). Because the appropriate strategy depends on how the contract was formed and what evidence you kept, obtaining an early legal review is advantageous when large sums are involved.

Cheongchul Law Firm is here to help

In advertising agency disputes, the outcome depends on how you prove the contract wording and what you were told when signing. Drawing on experience in fair trade and contract disputes, Cheongchul Law Firm supports you from contract review to penalty disputes and criminal complaints or regulatory reports. If you have been harmed by an online advertising agency contract, or need a review before signing, please contact Cheongchul Law Firm.

This post is provided for general legal information and does not constitute legal advice on any specific matter. The outcome of each case may vary depending on its specific facts, so please consult an attorney.