[Kwon Byeon's Law] Episode 74: Cosmetics OEM ③ Regulations to Know Before Selling Cosmetics

*This content was translated by AI.

It has become a common sight for influencers to launch cosmetics bearing their own names.

Followers are already secured, and large manufacturers handle production. It may seem as if all that remains is planning and marketing. However, the legal perspective differs.

The Cosmetics Act defines the business of distributing and selling cosmetics manufactured by a commissioned manufacturer as "cosmetics responsible sales." The ordering party is not merely a purchaser but the responsible entity at the distribution and sales stage. Selling without registration may result in imprisonment for up to three years or a fine of up to 30 million won.

In an actual case where a defendant manufactured and sold mask products without registration, the defendant argued that the product was a general consumer good. However, the court determined that the product qualified as a cosmetic based on its objective characteristics and labeling content, and rendered a guilty verdict. Simply stating "this is not a cosmetic" does not change the legal classification.

Liability becomes more direct when consumer harm occurs. In a side-effect case involving peeling cosmetics, the court regarded the individual who advertised and sold the product using their own business name as the manufacturer-sales entity and their brand as the product name as the "manufacturer" bearing product liability. This means that even without operating a factory, one is treated as a manufacturer if they put their name on the product.

Advertising is no exception. In a hair cosmetics advertising case, the defendant argued that the copy was written by a sales agency. However, the court recognized liability, noting that the copy directly used existing advertisements provided by the defendant and that modified sections were determined through consultation. Merely delegating the work does not serve as a shield against liability.

This is compounded by the obligation to provide actual proof. Advertisements related to facts must be self-verifiable, and materials must be submitted within 15 days upon request. However, the party that actually possesses human application test data is the manufacturer. If the contract does not include an obligation for the manufacturer to provide such data, a structure emerges where the data remains at the factory while the brand faces penalties.

It is also important to note that regulatory directions can change. Some provisions, such as those related to natural and organic cosmetics, have been recently deleted. Consequently, adhering strictly to past materials or previous review standards may lead to non-compliance. When reviewing advertising copy, it is necessary to develop the habit of checking the version of the law in effect at the time of the action.

The penalties for regulatory violations are not light. Unregistered business operations carry a potential sentence of up to three years in prison, while unfair labeling or advertising can result in up to one year in prison, and these penalties may be imposed concurrently. The issue is that a criminal record remains regardless of sales volume. Ultimately, there are three key points: complete registration before selling, establish the backend for product liability through indemnification and insurance clauses, and approve advertising copy along with supporting evidence.

It is also worth remembering that Article 15 of the Cosmetics Act uses "any person" as its subject. If a non-compliant product enters circulation, it is not only the factory that faces issues. Putting one's name on a product is an act of gaining trust, but simultaneously an act of assuming responsibility. It is better to calculate this weight in advance.

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*This content was translated by AI.