Regulators Push for Mandatory Disclosure of AI Characters in Advertising

Regulators are moving to mandate the disclosure of artificial intelligence (AI) characters in advertisements and enhance monitoring of so-called 'AI washing.' This initiative aims to address new consumer harms arising from the proliferation of generative AI, including phishing, fake reviews, and dark patterns.

The Fair Trade Commission (FTC) announced on September 4 that it held a joint academic conference with the Korean Consumer Law Association, the Korea Legislation Research Institute, the Korea Institute of Criminal Justice Policy, the Consumer Trust and AI Innovation Forum, and the Hanyang University Law Research Institute. The conference focused on 'Consumer Protection in the Age of AI and New Challenges in Consumer Law.'

In his opening remarks, FTC Vice Chairman Nam Dong-il noted, "While generative AI is rapidly becoming integrated into market transactions and enhancing consumer benefits, sophisticated phishing, fake reviews, and dark patterns based on AI are hindering consumers' rational choices and threatening market trust."

He added, "The FTC is pursuing the mandatory disclosure of AI characters in advertisements through revisions to the 'Guidelines for Review of Recommendations and Guarantees' and strengthening monitoring of AI washing. The 7th Basic Plan for Consumer Policy will prioritize AI and digital transformation to bolster the consumer protection framework."

During the conference, discussions were divided into two sessions: 'AI and Consumer Transactions' and 'AI and Consumer Safety.' The 'AI and Consumer Transactions' session addressed legislative directions for AI agents, consumer contracts, accidents and liabilities involving AI agents, and issues under e-commerce law. The 'AI and Consumer Safety' session covered integrated management of consumer safety through the collection and use of hazard information, prevention of hazardous goods spread on online platforms, governance of consumer safety related to AI usage, and consumer protection in the medical field involving generative AI.

Based on the discussions, the FTC plans to develop legal and institutional measures to create a safe consumer environment in the age of AI and continue discussions with academia on related topics.