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FTC slaps $300,000 fine on Kakao Entertainment for deceptive social media promotion

Published: 24 Mar. 2025, 14:17 Updated: 24 Mar. 2025, 16:53

PARK EUN-JEE
[email protected]

Kakao's headquarters in Bundang, Gyeonggi [NEWS1]

Korea's Fair Trade Commission (FTC) has imposed a corrective order and a fine of 390 million won ($290,000) on Kakao Entertainment for misleading online advertising designed to boost the popularity of music it distributes.

The decision marks the first time the antitrust regulator has sanctioned deceptive advertising in the pop music industry.

The company promoted its music through social media channels that it either acquired or established, but did not disclose that it owned or operated these accounts. As a result, consumers were not made aware that the promotional posts were paid advertising. From October 2016 to February 2024, 2,353 such posts were identified across 15 social media channels.

Kakao Entertainment also posted music-related content on major online communities without identifying the posters as company employees. Between May 2021 and December 2023, 37 such posts were found on online forums.

In addition, the company paid approximately 860 million won to 35 advertising agencies to promote its content without clearly disclosing the financial relationship. A total of 427 posts were made in this way between July 2016 and December 2023.

The agency said that consumers were likely to mistake these posts for genuine recommendations from ordinary users, rather than advertisements created and funded by the company. It ruled that hiding the economic interests involved undermined the credibility of the content and constituted a deceptive practice under fair advertising law.

The agency also noted that Kakao Entertainment was aware of the need to disclose such relationships, based on internal legal reviews, yet continued the violations. The company’s social media accounts involved in the advertising had a combined follower count of over 4.1 million, and the online communities had up to 1.5 million members, suggesting substantial influence on consumer behavior.

The FTC said it will continue to monitor advertising practices in the cultural sector to ensure consumers receive accurate information when making purchasing decisions.

Translated using generative AI and edited by Korea JoongAng Daily staff.

BY PARK EUN-JEE [[email protected]]