End of AI-Washing: South Korea Bans Unsubstantiated AI Claims in Advertising

The era of unpunished AI marketing is over. On September 2, 2026, the Korea Fair Trade Commission (KFTC) introduced strict regulatory rules: now, any company slapping a "Powered by AI" label on its product must provide the regulator with objective proof of an algorithmic basis.

Deadlines for submitting documentation have been radically shortened. This is the world's first major precedent in the fight against `AI-washing` (when ordinary software scripts are passed off as advanced AI to inflate capitalization). For hundreds of software startups, this means legal death. The B2B market had begun suffocating from scams, and the state intervened to protect investors and corporate clients. The KFTC's decision will trigger a chain reaction: US and EU regulators will soon copy this framework, forcibly purging the market of "paper" AI companies.

Source: KFTC / MLex