[Fact Check] "Only Advertisers Punished?" Loopholes in YouTube Undisclosed Sponsorship Regulations

YouTube Undisclosed Ads Face 'Iron Fist' from September
Sanctions Only on Businesses
No Punishment Measures for Influencers
Follow-up Legislation Continues
Broadcasting and Communications Authorities Must Secure Regulatory Powers

Stylist Han Hye-yeon admitted her mistake regarding the YouTube undisclosed advertising controversy and officially apologized.

[Asia Economy Reporter Koo Chae-eun] The so-called 'YouTube covert advertising' controversy has spread widely, prompting the Fair Trade Commission to crack down. However, since sanctions are limited to advertisers, influencers such as YouTubers cannot be held accountable, and platform operators like YouTube and Google are not subject to regulation, leading to criticism that the measures are only 'half-hearted.'

According to the industry on the 4th, the Fair Trade Commission finalized and implemented the revised 'Guidelines for Review of Indications and Advertisements Regarding Recommendations and Endorsements' starting from the 1st of this month. Accordingly, influencers must attach banners such as 'Sponsored' or 'Paid Advertisement' or display phrases like "Received a certain commission" or "This is an advertisement" so that consumers can clearly recognize the content as advertising when uploading videos. Displaying such indications only in a 'See More' section that requires clicking or using hashtags like '#AD', '#Cheheomdan' (experience group), or '#Sseowasseum' (have tried) is considered a 'trick' and not recognized as proper advertisement disclosure.

Why Can't YouTubers Be Punished?

The problem lies in who is subject to punishment. Platform operators like YouTube or Instagram bear no responsibility, and influencers who upload the videos face no significant sanctions. This is because the current 'Indication and Advertisement Act' views only businesses or business associations as entities that gain economic benefits from advertisements. An advertising industry official said, "There is a contradiction with the YouTube ecosystem where both platforms and influencers share advertising revenue."

In fact, last year, the Fair Trade Commission imposed fines totaling 269 million KRW on seven companies, including LG Household & Health Care and Amorepacific, for disguised advertising through influencers. However, influencers who received about 1.15 billion KRW in advertising fees at that time faced no sanctions due to the lack of relevant regulations.

Accordingly, last month, Democratic Party lawmakers Kim Doo-kwan and Jeon Yong-gi proposed an amendment to the Indication and Advertisement Act that would impose fines of up to 10 million KRW on influencers who receive promotional compensation from companies through YouTube, personal websites, or social networking services (SNS) but fail to disclose it. If the law passes, not only advertisers but also influencers who produce disguised advertisements will be subject to punishment.

Why Can't YouTube Be Sanctioned?

The issue is that there is no legal basis to sanction YouTube. This contrasts with the Korea Communications Standards Commission (KCSC), which imposes strict sanctions on broadcasters related to indirect, exaggerated, disguised advertisements, and manipulated broadcasts on terrestrial, home shopping, and paid broadcasting. For example, Mnet's entertainment program 'Produce' faced the highest sanctions under the Broadcasting Act due to vote manipulation controversies. TV Chosun's 'Tomorrow's Mr. Trot' received a 'warning' for promoting products through indirect advertising (PPL). The KCSC may impose severe penalties on broadcasting companies as platform operators if administrative guidance and legal sanctions accumulate for the same issues.

However, YouTube's legal status as a 'value-added telecommunications service provider' rather than a 'broadcaster' means the KCSC has virtually no authority to regulate its advertisements. The current KCSC Information and Communications Review Regulations allow correction requests (deletion orders) to YouTube only when content violates constitutional order, distorts history or facts, or contains hateful content, as specified in Articles 6 (Violation of Constitutional Order, etc.) and 8 (Violation of Good Morals and Social Order, etc.).

An industry official said, "Ultimately, there are tricks such as indirect advertising or PPL being broadcast through YouTube official accounts, which have lax regulations," adding, "The ambiguous legal nature of YouTube, which mixes one-person media and OTT, and the lack of enforcement power cause similar problems to recur." Another industry insider noted, "As the YouTube market rapidly grows with influencers having over a million subscribers, there is a need to align regulatory fairness with existing media." An expert senior advisor from the Democratic Party, Ahn Jeong-sang, pointed out, "As the influence of new media like YouTube and Instagram grows, the existing broadcasting regulations fail to comprehensively cover them, which is a persistent issue. This should be supplemented through follow-up legislation."

This content was produced with the assistance of AI translation services.