[Kim Taemin's Food and Drug Story] MFDS's Indifference to Platform Overadvertising

Health Supplement Ads Move from Newspapers to Online
Lack of Oversight on Platform Companies
Used Goods Trading Sites Breeding Ground for Exaggerated Ads
Proper Regulations Must Be Established Quickly

In 2018, the Constitutional Court ruled that the review of health functional food advertisements constituted prior censorship prohibited by the Constitution, deeming it unconstitutional. The incident that triggered this was when a business operator was fined 2 million won for placing a newspaper advertisement that differed from the advertisement phrase reviewed by the Ministry of Food and Drug Safety. Although this happened only a few years ago, it is no exaggeration to say that the market for food advertisements through newspaper ads has now become extinct. Health functional food advertisements have completely shifted online, and while new forms of advertising continue to emerge, the law has not kept pace. Media using artificial intelligence (AI) systems that display appropriate advertisements based on consumers' preferences, age, gender, etc., make it nearly impossible to know when and what ads will appear, and searching for them is difficult, making regulation almost impossible.

Moreover, secondhand trading sites and crowdfunding sites, which have evolved a step further, have recently become hotbeds for exaggerated food advertisements, yet the Ministry of Food and Drug Safety seems completely uninterested. Companies operating these sites are commonly referred to as platform companies. The term "platform" originally meant a train station where passengers board and alight, but with the advancement of information and communication technology, it has come to mean a foundation based on common utilization elements for developing and manufacturing various products or services. Most services we use daily, such as transportation card payments, messengers, and social networking services (SNS), are operated by platform companies. They provide consumers with easy access and allow product or service suppliers to directly reach many customers through the platform, reducing advertising costs and actively promoting their products or services, making platforms indispensable.

However, laws created to monitor and supervise traditional industries cannot effectively regulate the process by which platform companies directly connect business operators and consumers. Knowing this gap, illegal activities by platforms and business operators using platforms are worsening. For example, selling health functional foods on secondhand trading sites: socially, there is an implicit agreement that individuals who bought products but no longer need them can transfer small quantities to neighbors at low prices, making legal punishment difficult. However, it is hard to distinguish platform systems used by business operators who exploit platform characteristics by accessing with various IDs to specialize in small-quantity sales and exaggerate product advertisements, and Ministry of Food and Drug Safety staff cannot monitor all food advertisements on platforms daily.

The only solution is for platform companies to establish systems to prevent exaggerated advertisements. Or rather, the best approach is to require them to do so. Under current laws, it is difficult to investigate platform companies as accomplices or abettors for exaggerated advertisements by service suppliers, and administrative sanctions against platform companies, which are not registered or reported business operators, are impossible. Also, educating and promoting consumers using secondhand trading sites to distinguish exaggerated advertisements is ineffective in the short term. Therefore, in the long term, legal amendments are needed to include platform companies as reportable business types and to establish specific grounds for punishment.

This issue is the same for live commerce and crowdfunding sites. Live commerce, which lacks supervision by the Korea Communications Commission like home shopping, is unmanageable because broadcasts occur on numerous sites every hour, and there are no recorded videos for post-management. Fortunately, due to the nature of live commerce systems, they are operated only by major portal services, home shopping, and large telecommunication sales brokerage sites, so the number of targets for management is not large. However, despite the long-standing issue of exaggerated advertisements, it has become a regulatory blind spot due to practical difficulties. Currently, health functional foods or foods for special dietary uses are required by the Act on Labeling and Advertising of Foods to undergo voluntary review by designated organizations before advertising, but advertisements suspected of violating these regulations are likely still being broadcast openly. Furthermore, there are no clear guidelines for general foods, leading to widespread indiscriminate exaggerated advertisements.

Fortunately, crowdfunding sites display advertisement phrases clearly, making regulation easier, similar to general online sales. However, due to the nature of the sites, they avoid regulation by arguing that if crowdfunding fails, the product is not sold. Advertising is intended for sales, and the product must be delivered to consumers, but since this decision is not made during advertising, the platforms or business operators claim it is not a violation. However, the Act on Labeling and Advertising of Foods defines advertising as any act of presenting or informing product information through various media and methods, and clearly states that no one should engage in exaggerated advertising. Whether the product was sold on crowdfunding sites is a separate issue from violation. Unfortunately, the special judicial police organization called the Ministry of Food and Drug Safety Central Investigation Unit cannot investigate exaggerated food advertisements and only conducts simple administrative investigations before reporting individual business operators to the police, raising concerns that the seriousness of food crimes is not properly recognized.

Exaggerated advertising is a very serious criminal act corresponding to fraud under general criminal law, and considering that it was included in the administrative law, the Act on Labeling and Advertising of Foods, to facilitate punishment, neither the Ministry of Food and Drug Safety nor the police can ignore the gravity of the situation. We must not forget that exaggerated advertising is a malicious crime that hinders industrial development and deceives consumers. Regulations on platform companies operating live commerce and crowdfunding sites, including online platforms, must be promptly established to prevent consumer harm.

Lawyer, Food Hygiene Law Research Institute

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