[Editor's note] Recently, provocative keywords are being used to attract clicks, and unwanted promotional mobile messages are rampant. This is an online spam advertisement that takes advantage of lenient penalties and regulatory blind spots. We diagnose the domestic and international situation and seek possible solutions.
According to the industry on the 4th, regulatory authorities are taking action against online spam advertisements that cause user inconvenience. Following the Fair Trade Commission, the Korea Communications Commission also launched a factual investigation into Coupang's 'kidnapping advertisements' on the 20th of last month. Kidnapping advertisements are a type of 'redirection advertisement' that automatically leads users to online sites without them clicking the access button.
On 11th of last month, the Fair Trade Commission issued corrective orders and imposed a penalty surcharge of 357 million won on the Chinese shopping platform Temu for violations of the Fair Labeling and Advertising Act. The advertisement suggested users could easily receive cash-like points with just a few clicks, but in reality, users had to get multiple friends to register on the Temu app. The Fair Trade Commission determined that Temu's actions constituted fraudulent advertising, meeting all criteria of deception, consumer misrepresentation, and interference with fair trade.
4일 업계에 따르면 최근 규제 당국이 이용자 불편을 초래하는 온라인 스팸 광고에 대한 제재에 나서고 있다. 공정위에 이어 방송통신위원회도 지난달 20일 쿠팡 ‘납치 광고’ 행태에 대한 사실조사에 착수했다. 납치 광고는 사용자가 접속 버튼을 누르지도 않았는 데도 자동으로 온라인 사이트 접속을 유도하는 ‘리디렉션(redirection) 광고’다.
Regulatory authorities have taken action to prevent the spread of user damage caused by online spam advertisements. However, there are analyses suggesting that the effectiveness may not be substantial. This is because it is not easy to penalize such advertisements. There are no laws or systems to assess illegality, and even if classified as illegal advertisements, the level of punishment is low. Therefore, there are calls for punitive penalty surcharges for online spam advertisements similar to those in overseas jurisdictions. There have also been cases where penalty surcharges of 'trillions' were imposed abroad.
◇ It is not easy to assess the legality under current law... fines up to 50 million won
Advertisements that are false, exaggerated, deceptive, unfairly comparative, or defamatory are defined as illegal under the Fair Labeling and Advertising Act. However, the prohibition against advertisements that employ redirection or obscure content is specified in lower regulations (Enforcement Decree of the Telecommunications Business Act), making it difficult to assess their legality, with also weak penalties.
Lee Jung-jun, head of the criminal team at The-El Law Firm, noted, 'It is not easy to assess whether most online spam advertisements excessively infringe on user rights under current law,' and explained, 'Even if the regulatory authorities deem it an 'illegal advertisement', the actions they can take are limited to corrective orders.' He further stated, 'Even when classified as illegal advertisements, there is not an immediate structure for imposing fines. Penalties are only imposed when a business does not comply with corrective orders, which is also a small amount, capped at 50 million won,' adding, 'From a business perspective, this is a 'lenient penalty', and there is a need to introduce punitive regulations that link penalty surcharges to revenue.'
A representative from the Korea Communications Commission stated, 'The investigation into the legality of specific types such as kidnapping advertisements is the first case involving Coupang,' and added, 'Even if illegality is confirmed, there is a need for a multifaceted review of the level of punishment as there are no precedents.'
Industry assessments suggest that the penalty surcharge imposed by the Fair Trade Commission on Temu is relatively low compared to the degree of illegality. The Fair Trade Commission judged that Temu's behavior of ▲offering discount coupons (misleading advertising) ▲purchasing a Nintendo Switch for 999 won (exaggerated and false advertising) ▲providing cash-like points and free products (fraudulent advertising) violated the Fair Labeling and Advertising Act. Nevertheless, the penalty surcharge was only imposed for the act of 'providing cash-like points and free products', which is deemed insufficient compared to the user damage.
Kim Joo-ho, head of the People's Solidarity for Participatory Democracy's Economic Team, stated, 'It is inappropriate for authorities not to take action despite user damage occurring, citing the lack of clear prohibitive regulations,' and noted, 'If there are no regulations, it is the government agency's role to fill the gap through legislative proposals and safeguard consumer protection, yet they are currently neglecting their duties.'
◇ In overseas jurisdictions, imposing a 'trillion' penalty surcharge for illegal personalized advertisements
Overseas, there is a growing atmosphere of strengthening sanctions and penalties against personalized advertisements that misuse personal information. The National Commission for Data Protection in Luxembourg (CNPD) imposed a penalty surcharge of 746 million euros (approximately 1.2 trillion won) on Amazon in 2021 for providing personalized advertisements by collecting user patterns without adequate consent, violating the General Data Protection Regulation (GDPR). The GDPR stipulates that violators can be fined up to 4% of their global revenue. Amazon contested the CNPD's decision for about four years but lost in March this year.
The European Commission also decided in April of this year to impose a penalty surcharge of 200 million euros (approximately 325 billion won) on Meta, targeting the 'consent for cost payment or information collection' issue introduced in November 2023. Facebook and Instagram paid users do not collect personal information for advertising purposes; however, free users are effectively coerced into consenting to information collection. The EU viewed Meta's actions as a violation of the Digital Markets Act (DMA), which allows for penalty surcharges of up to 10% of annual revenue.