In 2026, the Korea Fair Trade Commission (KFTC) has taken two significant steps to address the growing risk of AI-related false and exaggerated advertising. First, the KFTC amended its “Review Guidelines on Labelling and Advertising for Endorsements and Testimonials” (Review Guidelines) to capture AI-generated “virtual persons” within the existing endorsement framework so that there is clear disclosure whenever such virtual persons are used to promote a product. The amendments to the Review Guidelines took effect on June 1, 2026.
Second, on June 23, 2026, the KFTC proposed amendments to its “Notice on the Operation of Substantiation of Labelling and Advertising” (Substantiation Notice) which would require businesses to substantiate advertising claims involving AI and new technology prior to publication and to produce supporting evidence on request or become subject to an order to suspend the advertisement. Following the conclusion of the public comment period on July 13, the proposed amendments to the Substantiation Notice are expected to be implemented.
Together, these measures reflect the KFTC’s broader effort to combat “AI-washing” (the practice of overstating or fabricating AI involvement in products and services to influence consumer purchasing decisions) and suggest that legal risk associated with unsubstantiated or improperly disclosed AI-related advertising claims will continue to rise. The key details and implications of the Review Guidelines and Substantiation Notice are as follows:
I. Review Guidelines for Endorsements and Testimonials
The key contents of the amendments to the Review Guidelines are as follows:
A. Express inclusion of “virtual persons”
The previous Review Guidelines defined the subjects of endorsements and testimonials as consumers, celebrities, experts, and organizations or institutions. The amendments add “virtual persons” created using AI or similar technology to this list. This addition now establishes a clear basis for AI-based advertising to be regulated within the existing framework.
B. Mandatory disclosure obligation for advertisements featuring virtual persons
When an AI-generated virtual person is used in an endorsement or testimonial, the advertiser is now required to disclose clearly that the person is a virtual character. The disclosure must be made in a manner that consumers can clearly and easily recognize.
■ Text-based media (e.g., blogs, etc.): The title of the post or the beginning text of the body must include a statement such as “This post contains a virtual person generated by artificial intelligence (AI)” or “Includes virtual person.”
■ Photo or video media: During the appearance of a virtual person, text such as “Virtual Person” must be displayed in close proximity to the virtual person.
C. Regulation of “experience-based claims” by virtual persons
The amended Review Guidelines also expressly provide that where a virtual person’s endorsement or testimonial is presented based on an actual experience, such as user review, any content that does not reflect a real experience may constitute an unlawful advertisement (if false, exaggerated, or deceptive) under the Fair Labeling and Advertising Act (FLAA).
■ For example, a before and after testimonial featuring an AI-generated virtual consumer, with content that does not reflect reality used to exaggerate the efficacy or effects of a product, would be a representative example of unlawful advertising.
II. Substantiation Notice
The labelling and advertising substantiation system under the FLAA requires businesses to bear the burden of proving factual claims made in labelling and advertising. The Substantiation Notice sets out the specific operating standards for this system, including the request, review and processing of substantiating materials.
The current Substantiation Notice has not been substantively updated since 2015 and does not expressly address claims relating to AI or other recently developed technologies, nor does it reflect the KFTC’s enforcement practices developed thereafter. Thus, the proposed amendments are intended to bring AI- and new-technology-related claims expressly within the scope of the Substantiation Notice and, in order to prevent the spread of consumer harm, allows the KFTC to issue a cease-and-desist order against an advertisement where a business fails to submit the required substantiating materials.
The key contents of the proposed amendments to the Substantiation Notice are as follows:
A. Clarification on object of request for substantiating materials
The current Substantiation Notice allows the KFTC to request substantiating materials relating to
(i) direct effects on the human body,
(ii) safety or the environment,
(iii) performance, efficacy or quality, and
(iv) other matters that materially affect consumers’ purchasing decisions or trade order.
As claims regarding AI functionality in products and services have become more common, the proposed amendments expressly clarify that advertising claims relating to AI functionality and other new technologies also fall within this scope, such as the following examples:
■ Claims of having adopted new technology, such as describing a product as “safer through artificial intelligence (AI) technology”;
■ Claims involving safety, environmental or new-technology-related marks or certifications; and
■ Environmental claims relating to eco-friendliness, recyclability or reduced carbon emissions.
B. Specification of procedures for requesting and submitting substantiating materials
Under the current Substantiation Notice, substantiating materials must currently be submitted, in principle, within 15 days of the KFTC’s request, with a possible extension of up to 30 days (from the date the relevant cause ceases) where submission is impossible due to force majeure or other unavoidable causes. The proposed amendments to the Substantiation Notice set out the qualifying grounds for extension in greater detail, namely: (i) force majeure; (ii) a merger or acquisition, or the commencement of rehabilitation, bankruptcy or similar proceedings; (iii) seizure or temporary custody of the books and records or evidentiary documents of the business by an authorized agency; or (iv) a fire or other disaster causing serious disruption to the company’s operations. Also, in order to reinforce the principle that businesses should substantiate their claims before advertising, the amendments to the Substantiation Notice shorten the maximum extension period from 30 days to 15 days.
In addition, where a business continues to run an advertisement without submitting the requested substantiating materials within the applicable (including any extended) period, the proposed amendments to the Substantiation Notice would allow the KFTC to issue a cease-and-desist order against that advertisement until the proper materials are submitted.
C. Introduction of self-assessment checklist
The proposed amendments to the Substantiation Notice also introduce a checklist to help businesses assess, both before and after publishing an advertisement, whether they have complied with their substantiation obligations, including in relation to substantiation methodology, evidence-gathering and the submission of materials.
III. Implications of Amendments
The amendment of the Review Guidelines and the proposed amendments to Substantiation Notice show that the KFTC is bolstering its enforcement of the FLAA. This includes the KFTC’s goal to strengthen economic sanctions for unlawful advertising. Amendments to the Enforcement Decree under the FLAA, which significantly raise administrative fines for repeat violators and reduce financial incentives for mitigating factors, took effect in July 2026.
Additionally, the KFTC established a dedicated “Labelling and Advertising Monitoring Team” on March 23, 2026. Together with amendment on the Review Guidelines and the proposed amendments to the Substantiation Notice, these measures suggest that the legal risk associated with unsubstantiated claims relating to AI, new technology or the environment will continue to rise.
With the KFTC’s increasing enforcement interest in AI-related advertising activities, companies should consider establishing proactive internal and external review processes for the creation and execution of advertising, supported by the KFTC’s new self-assessment checklist, to mitigate the associated risk.