– Advertising agencies that lead undisclosed (“backdoor”) ads will also face sanctions –
The Korea Fair Trade Commission (KFTC) has decided to issue a corrective order against the advertising agency Neof Co., Ltd. (formerly UrbanFast Co., Ltd.) for deceptive advertising practices. The company recruited influencers to post restaurant and accommodation experience reviews on social media without disclosing their economic relationships with advertisers.
From July 15, 2020, to December 21, 2023, Neof recruited influencers through its KakaoTalk channel service and had them post a total of 2,337 promotional posts on Instagram for 209 advertisers. The influencers received economic benefits such as free meals and writing fees, but these relationships were not disclosed in their posts.
Such conduct violates the Act on Fair Labeling and Advertising, as it misleads consumers into believing the posts are voluntary reviews written without financial incentives, thereby potentially distorting rational purchasing decisions.
This case is significant because the advertising agency itself actively solicited restaurant owners and small business advertisers for social media promotions, connected them to influencers, and even provided guidelines instructing influencers not to disclose that they had received compensation. The KFTC therefore held the agency directly responsible for leading the violation and imposed sanctions.
During the KFTC’s investigation, Neof deleted or corrected the unlawful advertisements.
This decision highlights that advertising agencies can be sanctioned if they organize or lead undisclosed (“backdoor”) advertising on social media. It serves as a warning to the advertising industry and aims to ensure that consumers receive accurate and transparent information.
The KFTC announced that it will continue to monitor and crack down on unfair advertising practices in the social media review advertising market.