The Fair Trade Commission announced that it will strengthen the requirements so that businesses violating advertising laws, such as false advertising, cannot receive penalty surcharge reductions unless they cease the violations, even if they cooperate during the investigation and deliberation process.
The Fair Trade Commission stated on the 2nd that it will revise and implement the notice titled, "Detailed standards for the imposition of penalty surcharges on entities violating the Act on Fairness in Display and Advertising," effective from the 3rd.
In this revised notice, the basis for estimating sales revenue for penalty surcharge calculations has been clearly defined. Previously, if the sales revenue related to the legal violation was unclear, only a fixed penalty surcharge could be imposed, independent of sales. Moving forward, sales estimates will be made based on a comprehensive consideration of performance before and after the violation, market conditions, etc., providing a basis for imposing a percentage-based penalty surcharge.
The requirements for the cooperation reduction system have also been revised. Previously, businesses violating the law could receive a 20% reduction in penalty surcharge if they acknowledged the violation and submitted evidence or statements necessary for assessing the illegality before the conclusion of the Fair Trade Commission's investigation and deliberation.
According to the revised terms, the cooperation requirements during the investigation and deliberation phases will be separated, allowing a reduction of up to 10% in penalty surcharges for each phase of cooperation. Specifically, a 10% reduction can be granted for active cooperation during the investigation process, and a further 10% reduction is possible for cooperation during the deliberation phase and acknowledgment of the violation by the psychological conclusion. Beyond acknowledging the violation, businesses must cease the violation by the end of the Fair Trade Commission's deliberation to receive the penalty surcharge reduction benefits, reinforcing the requirements.
A representative from the Fair Trade Commission noted, "We intend to strictly apply reduction conditions to mitigate consumer damage from false advertising and enhance the effectiveness of law enforcement."