South Korea Cracks Down on 'Label Swapping' Fraud, Uncovers 41.6 Billion Won in Violations

South Korean authorities have exposed a widespread scheme of illegal "label swapping" in the apparel industry, uncovering fraudulent practices totaling over 41.6 billion won (approximately $30 million USD). A nationwide joint crackdown, conducted over 100 days from February to May, targeted 193 companies for violations including misrepresenting product origins.

The scale of the detected fraud is nearly triple that of a similar special crackdown in 2019, which identified 71 companies and 15 billion won worth of violations. Investigations revealed that clothing wholesalers instructed sewing companies to replace foreign labels with domestic ones before supplying the garments as Korean-made. Other violations included removing origin labels entirely or selling foreign goods without any origin indication.

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Label swapping is a serious illegal act that collapses the domestic production base and damages the brand value of K-fashion.

Alarmingly, the scheme extended to public institutions. Protective clothing worth 3.6 billion won, intended for public procurement, was falsely labeled as domestically produced. Additionally, civil defense uniforms for local governments worth 16 million won had their origin labels removed, and department stores sold 180 million won worth of clothing with swapped domestic labels.

In response, the government and National Assembly are pursuing stricter penalties for origin misrepresentation and establishing a permanent surveillance system. This includes a new label-swapping reporting center in cooperation with local governments. Lee Jong-wook, Commissioner of the Korea Customs Service, emphasized that label swapping severely damages the K-fashion brand value and the domestic production base, vowing to eradicate such illegal activities through intensified crackdowns and enhanced communication with industries and consumers.

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We will do our best to eradicate origin misrepresentation by strengthening origin labeling crackdowns, expanding cooperation with related agencies, and increasing communication with the industry and consumers.