South Korea Busts $30 Million Clothing Label Fraud, Government Gear Falsely Marketed

South Korean authorities have uncovered widespread "label-switching" schemes where imported clothing was falsely marketed as domestic, leading to the detection of unfair practices worth 41.6 billion won ($30 million) across 193 companies. The crackdown, a joint effort by the Korea Customs Service, Fair Trade Commission, Public Procurement Service, National Police Agency, and the Seoul Metropolitan Government, ran for 100 days from February to May.

The investigation revealed that clothing wholesalers instructed garment manufacturers to replace original labels on imported apparel with "Made in Korea" tags or to remove origin labels entirely before selling them. Alarmingly, the scheme extended to workwear and protective gear supplied to government agencies, including civil defense uniforms and chemical protective suits, which were also misrepresented as domestically produced.

This operation significantly surpassed the results of a similar crackdown in 2019, which identified 15 billion won in illicit activities. The government plans to impose fines and pursue criminal charges against the implicated companies under the Foreign Trade Act. Additionally, companies involved in public procurement will face restrictions on bidding for government contracts and the recovery of illicit gains.

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The government will pursue fines and criminal charges against the implicated companies.