Hello, this is attorney Eom Sang-yoon of Cheongchul Law Firm.

The labelling and advertising through which a business tells consumers about its goods and services is itself one strand of the constitutional freedom of expression; yet where it conveys inaccurate or misleading information, it seriously distorts commercial order and consumer protection. That is why the Act on Fair Labeling and Advertising (the “Labeling and Advertising Act”) prohibits unfair labelling and advertising and gives the Korea Fair Trade Commission (KFTC) broad sanctioning powers — corrective orders, administrative fines and criminal referral. The recurring practical difficulty, however, is that the tests for which expressions amount to unfair labelling or advertising, and by what yardstick that unfairness is measured, are not always intuitive.

Today we first map the four statutory types of unfair advertising and then examine the common standards that run through all of them.

The four types of unfair labelling and advertising, and the gateway for each

Article 3(1) of the Labeling and Advertising Act divides unfair labelling and advertising into four types: (i) false or exaggerated, (ii) deceptive, (iii) unfairly comparative, and (iv) slanderous; Article 3 of the Enforcement Decree sets out the detailed requirements for each. What all four share is the ultimate gateway: the labelling or advertising must (i) be likely to deceive consumers or cause them to be misled (likelihood of misleading), and (ii) be likely to harm fair trading order (impairment of fair trade).

False or exaggerated labelling and advertising

This type covers labelling or advertising that departs from the facts or inflates them excessively. It reaches not only statements contrary to fact but also inflation that ends up causing consumers to misperceive the actual content of the goods or services.

Deceptive labelling and advertising

This type covers labelling or advertising that conceals or understates facts. If false or exaggerated advertising is ‘actively inflated expression’, deception is a matter of ‘passive concealment — failing to disclose what should have been disclosed’. In practice the frequent battleground is what counts as a so-called ‘material matter’ that must be disclosed to consumers.

Unfairly comparative labelling and advertising

This type covers advertising that fails to specify the object or criteria of comparison, or that claims superiority or advantage over another business without objective grounds. Legitimate comparative advertising usefully informs consumers, while unfair comparison undermines trust in the market, so drawing the boundary is the heart of the regulation.

Slanderous labelling and advertising

This type covers labelling or advertising that states matters without objective grounds about another business or its goods and services, or that disparages by presenting only unfavourable facts. Even a truthful statement falls within this type if it selectively emphasises only what is unfavourable to the other party.

Three standards for judging unfairness

While the requirements of the four types are distinct as above, whether unfairness is actually found in a given case is judged against three common standards.

The vantage point: the ordinarily attentive consumer and the overall, ultimate impression

The first is ‘from whose vantage point the judgment is made’. The Supreme Court has established that unfairness is judged by the overall, ultimate impression that the labelling or advertising leaves on an ordinary consumer of ordinary attentiveness. What matters is not the advertiser’s intent or a literal reading of the wording, but how a typical consumer actually perceives the message and what decision it leads to. ‘Overall, ultimate impression’ means that individual phrases are not assessed in isolation; the general image left by the visual and verbal composition of the advertisement as a whole must be considered together.

Likelihood of misleading: a risk, not a result

The second standard concerns the likelihood of misleading. Unfairness does not require proof that consumers were actually misled; a mere likelihood of misleading suffices. This reflects the Act’s character as regulation aimed at maintaining market order prospectively rather than remedying harm after the fact, and it is why an advertiser’s defence that “our consumers did not perceive it that way” or “there are no actual instances of confusion” does not by itself negate unfairness.

Materiality: does it substantially affect the purchase decision?

The third standard is materiality. Decisive above all for the deceptive type, it asks whether the concealed or understated matter is a material matter capable of substantially affecting the consumer’s purchase decision. Typical examples are the information consumers ordinarily factor into a purchase: price, quantity, quality, performance, use, specifications, transaction terms, safety, sales area, after-sales conditions, refunds, and termination or rescission terms. If every failure to disclose a trivial matter counted as deception, advertising practice would be paralysed; the materiality filter keeps the regulation focused where consumer protection is genuinely needed.

These three do not operate independently but combine into a composite indicator of unfairness. In other words, unfairness is ultimately found where, in sequence, (i) from the perspective of the ordinary consumer’s overall impression, (ii) a likelihood of misleading is established, and (iii) that misleading concerns a material matter.

Practical implications for advertisers

This structure carries several practical implications for advertisers.

Pre-review at the planning and clearance stage

First, at the planning and clearance stage, simulate in advance the overall impression the copy and imagery will leave on an ordinary consumer. Even where each phrase is factually accurate, if the layout, emphasis or visual staging steers consumer perception in a particular direction, any gap between that perception and the actual product can lead to a finding of unfairness. The sentence “this product contains ingredient A” may be true, but if it is placed front and centre so that consumers take A to be the main active ingredient, it may amount to deceptive advertising where the actual proportion is negligible.

Completeness of material disclosures

Next, the completeness of material disclosures is the decisive axis of defence. The practice required is to present, in balanced fashion, the information consumers ordinarily wish to know — including what is unfavourable to the advertiser — without understating or concealing it. The more disadvantageous the condition, the more its position, size, colour and display duration must be such that consumers can genuinely register it; simply appending a so-called ‘fine-print disclaimer’ is unlikely to be accepted as a defence.

Recent regulatory trends

Recent trends show the KFTC steadily bringing areas that were once grey zones of case-by-case judgment into express regulation: (i) the amended Review Guidelines on Labeling and Advertising Using Recommendations and Endorsements, which introduced a disclosure duty for advertising using AI-generated virtual figures (effective 1 June 2026); (ii) new rules under the amended Enforcement Decree of the E-Commerce Act requiring disclosure of how user reviews are collected and processed (effective 21 July 2026); and (iii) the expanding regulation of deceptive interfaces of the ‘dark pattern’ type. The pattern is one of building fine-grained standards through individual guidelines and notifications for areas where the doctrine on the traditional four types does not transfer neatly to emerging marketing methods.

Where unfair labelling or advertising is found, the advertiser may face a corrective order under Article 7 of the Act together with an administrative fine of up to 2% of relevant turnover under Article 9 (up to KRW 500 million where there is no relevant turnover or it is difficult to calculate), and a grave and obvious violation may attract criminal punishment under Article 17. The Act may also ground liability in damages under Article 10 and following, so an advertiser’s total exposure in consumer class actions and unfair advertising damages claims can far exceed the scope of administrative sanctions.

Because unfairness is never determined by a literal truth check alone but on the multi-layered yardsticks of consumer perception, materiality and overall impression, advertising content needs a practical structure in which legal and compliance filtering intervenes from the creative stage. The terrain of the Labeling and Advertising Act keeps being refined by accumulating case law, guidelines and notifications, so tracking the direction of regulatory change is the starting point for managing legal risk.