Democratic lawmaker introduces bill to crack down on clothing label fraud

Rep. Kim Nam-geun of the Democratic Party of Korea — a member of the National Assembly's Land, Infrastructure and Transport Committee representing Seoul's Seongbuk-eul district — announced Thursday that he had introduced a bill to amend the Foreign Trade Act. The bill would strengthen penalties and fines for country-of-origin mislabeling to stamp out the practice of passing off foreign-made clothing and fabric as domestically produced.

South Korea's fashion and garment industry is one of the country's most representative urban manufacturing sectors, with a large concentration of manufacturers and small business owners centered in Seoul, Kim said.

The practice of fraudulently relabeling foreign-made clothing or fabric as domestic — commonly known as "label swapping" — is widely cited as a prime example of unfair trade conduct that weakens the competitiveness of domestic garment makers, erodes consumer trust and damages the brand value of K-fashion.

Calls for stronger enforcement and regulatory reform have grown louder as mislabeled products have made their way into both public procurement markets and general retail channels, hurting law-abiding domestic garment manufacturers in the process.

A joint crackdown by related ministries during the Moon Jae-in administration in 2019 caught 71 companies involved in clothing origin-labeling violations, with goods worth about 15 billion won ($9.93 million) seized. A fresh pan-government joint crackdown conducted this year — roughly seven years later — uncovered unfair trade practices including origin-labeling violations at 193 companies, involving goods worth about 41.6 billion won. The results underscore that label swapping and country-of-origin fraud remain far from eradicated.

An analysis of data Kim obtained from the Korea Customs Service and the Seoul Metropolitan Government found that enforcement of origin-labeling rules is driven almost entirely by the customs service, while Seoul's own independent inspections fall far short.

The Korea Customs Service submitted figures broken down by customs clearance and retail distribution stages, while the Seoul Metropolitan Government provided only the number of companies caught at the distribution stage, citing ongoing or pending referrals to prosecutors. Direct comparison is limited by the differing formats, but a year-by-year review of enforcement records confirmed that Seoul's independent crackdowns lag well behind those of the customs service.

Seoul is home to the country's largest concentration of fashion and garment industry clusters, spanning Dongdaemun, Seongsu, Jungnang and Seongbuk. Yet the city's enforcement record has been found inadequate relative to the scale and importance of the industry, prompting calls for stronger oversight to protect the local sector.

Kim's office also analyzed the Korea Customs Service's 2026 enforcement cases and found that the most common type of origin-labeling violation involved passing off foreign fabric as domestically produced for export — the largest share among all violation categories. The findings suggest that cases of disguising foreign goods as Korean-made products for overseas sale go well beyond simple label swapping, raising concerns about potential damage to K-fashion's international reputation.

The bill includes stiffer penalties for origin-labeling violations, aggravated punishment for repeat offenses within five years, fines proportional to the scale of the violation, and heavier fines for habitual offenders. The legislation reflects criticism that current law imposes weaker penalties than the Act on Origin Labeling of Agricultural and Fishery Products and lacks sufficient deterrence against repeat violations.

"Label swapping is a prime example of unfair trade conduct that weakens the competitiveness of our fashion and garment industry and undermines consumer trust," Kim said. "Through this amendment to the Foreign Trade Act, we will strengthen penalties and fines to eradicate label swapping. The Korea Customs Service must also continue its efforts — including building a permanent enforcement system in coordination with local governments and expanding its inspection workforce."