Starting Tomorrow, AI-Generated Virtual Characters Must Be Labeled or Face Unfair Advertising Charges

Full regulation of AI virtual character ads... Specifics of 'disclosure obligations' finalized

Even if labeled as virtual characters, ads based on false or exaggerated experiences will be subject to regulation

The Fair Trade Commission (FTC) announced on the 31st that it has finalized the amendment to the 'Guidelines for Review of Labeling and Advertising regarding Recommendations and Endorsements' and will implement it starting June 1st.

This amendment is a measure to respond to the proliferation of AI-utilized advertising by refining the detailed criteria for determining violations of the Labeling and Advertising Act.

Under the amendment, 'virtual characters' have been newly included as a type of entity providing advertising recommendations or endorsements. AI-based generated characters are now defined as independent entities, adding to the existing four categories: consumers, celebrities, experts, and organizations/institutions.

Accordingly, advertisements featuring virtual characters, such as AI doctors or AI professors, will now be subject to regulation. Such advertisements must be labeled in a way that consumers can easily recognize, depending on the characteristics of the medium.

In the case of video advertisements, phrases such as 'Virtual Character' must be continuously displayed near the character on the screen while they appear.

For text-based media such as blogs or internet cafes, phrases like "Contains AI-generated virtual character" must be clearly stated in the post title or at the beginning of the body text.

Furthermore, even if a character is labeled as virtual, the ad may be judged as unfair labeling or advertising if it is based on false or exaggerated experiences, pretending to have actually experienced the product. For example, if a character conveys a non-existent usage experience as a fact, saying "I used this product myself and it worked well," it will be subject to sanctions.

However, a violation of the guidelines does not automatically lead to a violation of the law.

An FTC official explained, "Sanctions for unfair labeling and advertising occur only when consumer misunderstanding and actual purchase distortion occur due to false or exaggerated advertising."

The Fair Trade Commission expects that this measure will help consumers more clearly understand the identity of the advertising entity and increase market awareness by providing advertisers and influencers with criteria to predict potential legal violations in advance.

Source: https://www.fmkorea.com/best/9895274015