Hello. I am Attorney Lee Young-Kyung from Cheongchul Law Firm.

The Fair Trade Commission actively enforced the Advertising Act in 2025 as well, and in this column, we will take a detailed look at the revision of the penalty guidance and cases of penalties enforced under the Advertising Act, based on the press release related to the Advertising Act by the Fair Trade Commission in 2025. Please note that this is based on the press release at the time of the enforcement by the Fair Trade Commission, and the final confirmation may vary due to factors such as litigation.

Cheongchul Law Firm is comprised of attorneys with experience in representing companies in investigations by the Fair Trade Commission related to the Advertising Act and gaining recognition in court for the legality of penalties for violations of the Advertising Act. If you have any questions regarding the matters below, please do not hesitate to contact Cheongchul Law Firm.

0. Amendment and Implementation of the Advertising Act Penalty Guidance

Before we begin the detailed case analysis, the Fair Trade Commission amended and implemented the 'Advertising Act Penalty Guidance' starting from January 3, 2025. The main intent is to reflect the content of the revision of the guidelines on 'detailed standards for imposing penalties' under the Fair Trade Act.

• Clarification of Basis for Sales Calculation: Even if the violating business does not submit materials, grounds to reasonably estimate sales through objective materials (pre/post results, total sales during the relevant period, sales ratio of related products, market conditions, etc.) have been established.

• Strengthening Conditions for Mitigation for Cooperation in Investigations and Reviews: Previously, to receive a 20% reduction in penalties, all conditions of acknowledging the facts of the behavior and submitting materials or statements helpful for legality judgment until the conclusion of the Fair Trade Commission investigation had to be met. However, the revised proposal distinguishes between the investigation stage (10%) and the review stage (10%), providing a 10% reduction if actively cooperating in the investigation, and a 10% reduction if the facts of the act are acknowledged until the conclusion of the review stage, provided that the violation must cease by the end of the review.

Reference Press Release: January 2, 2025, Press Release on the Amendment and Implementation of the Advertising Act Penalty Guidance

1. Sanction against Ace Bed Co., Ltd.'s Unfair Display Practices

A. Overview of the Case

From around November 2016 to around June 2018, Ace Bed sold a disinfectant and insect repellent for mattresses called 'Microguard' and labeled their product packaging with "Manufactured using non-harmful raw materials." The product emphasized that it contained components approved by the U.S. EPA and included the statement, "Use with confidence."

B. Fair Trade Commission's Judgment

The Fair Trade Commission found that the above actions fell under the category of 'false and exaggerated display acts' under Article 3, Paragraph 1, Subparagraph 1 of the Advertising Act.

• Falsehood and Exaggeration: The main ingredients, DEET and Chloroxylenol, are evaluated as having a certain level of toxicity and harmfulness based on exposure routes according to the U.S. Environmental Protection Agency's (EPA) 'Re-registration Eligibility Decision Document (R.E.D. Facts)' and the Material Safety Data Sheets (MSDS) by the Korea Occupational Safety and Health Agency. Ace Bed presented data stating 'no concern for harm' based on risk assessments, but the Fair Trade Commission judged that this only relates to risk based on exposure levels and did not prove the harmlessness of the ingredients themselves.

• Consumer Confusion: The Fair Trade Commission believed that ordinary consumers would take the expression 'non-harmful to the human body' at face value and might trust the company's explanation, leading to a significant risk of misunderstanding that the product was completely harmless, especially since it was stated along with the phrases 'approved by the U.S. EPA' and 'safe to use as it is non-harmful (government accredited testing completed).'

• Interference with Fair Trade: The harmlessness of chemical products related to health is an important factor in purchasing decisions, and false displays hinder consumers' rational choices.

• Action Taken: Issued a corrective order (prohibition of conduct).

C. Implications of the Case

This case reaffirms that using absolute expressions such as 'harmless' despite including toxic components is a violation of the Advertising Act, regardless of meeting safety standards.

Reference Press Release: April 8, 2025, Press Release on the Sanction of Ace Bed Co., Ltd.'s Unfair Display Practices

2. Sanction against Eduwill Co., Ltd. and ST Unitas Co., Ltd.'s Unfair Advertising

A. Overview of the Case

1) Unfair Advertising Practices by Eduwill Co., Ltd.

• Limited Time Advertising: Eduwill advertised 109 online lecture products related to qualification exams such as licensed real estate agents through 13 cybermall websites from June 1, 2020, to April 17, 2023, using phrases like "Limited Time, Only 50,000 KRW Special Discount for Just 1 Week", "Last Chance", "Limited Time, 00% Exceptional Discount". Notably, among these, 11 job-related products were advertised in cycles of about a week, but they did not inform consumers that the same products, with no factual differences in price or composition, would continue to be sold even after the recruitment period.

• Unfair Promotion Advertising: They conducted a company-wide event from December 2022 to October 2023, advertising that high-priced prizes such as 'Apple AirPods' and 'Samsung Galaxy Tab' would be awarded to purchasers through a lottery. However, they had no intention of purchasing or providing such prizes and did not actually deliver them through the lottery.

2) Violations by ST Unitas Co., Ltd.

• Limited Time Advertising and Lowest Price Advertising: From January 2017 to November 2021, they sold 47 products under brands like Gongdan and Kyungdan using phrases like "Only □ Days Left Until Sales End at 00:00:00", "Final Chance, Hurry Up!" advertising that benefits would disappear after the advertisement ends. Additionally, from July 2 to August 16, 2021, they sold 3 products at higher prices than the previous selling price while advertising it as "Today's Lowest Price," and even lowered prices right after the advertisement.

• Advertising Restrictions Related to Limited Time Advertising: From June 4 to August 5, 2021, they emphasized the end of product sales on their website and included the important information at the bottom stating, "It may be resold at the same price and benefits later." However, this text was handled in a color similar to the background color, making it appear faint, or placed in significantly smaller font, making it difficult for consumers to identify.

2. Fair Trade Commission's Judgment

The Fair Trade Commission determined that the actions of the two companies violated Article 3, Paragraph 1, Subparagraph 1 (false and exaggerated advertising) and Subparagraph 2 (deceptive advertising) of the Advertising Act.

A. Falsehood and Exaggeration (related to period and price)

• [Related to Limited Time Advertising] The Fair Trade Commission viewed that advertising as if specific prices or benefits would only be provided until the stated end dates was misleading since they continued to sell under the same conditions post-deadline, which appeared to be inaccurate about the limited nature of the products and the scarcity of benefits without reasonable grounds or excessively inflated facts.

• [Related to Lowest Price Advertising] They judged that even though they emphasized "Today's Lowest Price,” if it was a higher price afterward or that prices dropped immediately after the advertisement, these actions distorted the objective truth about price information, thus violating the Advertising Act.

B. Deceptiveness (related to information concealment)

• The Fair Trade Commission deemed the action of presenting unfavorable restrictions or facts that consumers must know (such as resale possibility) in a color similar to the background or in very small print as a 'deceptive method.'

C. Illegality of Prize Advertising

• The Fair Trade Commission specified that advertising that high-priced prizes would be awarded without the intention or substance (purchase records) is false advertising without reasonable and objective grounds. Ordinary consumers with normal attention might mistakenly believe that buying online educational products via the event could lead to winning high-priced goods, recognizing consumer confusion. Since prizes are a strong incentive for consumers' purchase decisions, using them falsely poses a risk of undermining fair trading order in the online education market.

D. Perceived Likelihood and Level of Sanctions

• The Fair Trade Commission paid attention to the fact that both companies were parties to the 'Self-Regulation Agreement to Prevent Unfair Advertising in the Online Lecture Industry' concluded in November 2019. Thus, considering that they were in a situation where they could sufficiently recognize the possibility of legal violations but continued the violations, they decided to impose a total fine of 310 million KRW (1.54 billion KRW for Eduwill and 1.56 billion KRW for ST Unitas) along with a corrective order and public announcement order.

• Regarding Eduwill's prize advertising, it was comprehensively considered that the event was about the prize itself rather than the content of the product, all participants in the event received lecture discount coupons and some of the promised prizes were actually provided, so no penalty was imposed.

3. Implications of the Case

This case is a strong demonstration of the Fair Trade Commission's will to enforce the law against chronic unfair limited-time advertising marketing and prize event marketing techniques in the online education industry. It clearly indicates that marketing that hinders consumers' rational choices is no longer within the realm of marketing but a subject of legal sanctions.

Reference Press Release: April 10, 2025, Sanctions against Eduwill Co., Ltd. and ST Unitas Co., Ltd. for Violating the Advertising Act

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