Can an Employee Be Prosecuted for Spreading False Information About a Company in South Korea?

1. What False Claims Did the Former Employee Make in South Korea?

In the online gaming industry, player trust in fairness is foundational to a company’s business. Claims made by someone with apparent insider knowledge carry outsized credibility — and outsized potential for harm. Y exploited precisely this dynamic.

The Three False Claims

Y posted the following allegations on gaming community forums:

• Rigged gameplay: The game contained a “winning bot” that made it impossible for regular users to win
• Privacy breach: A hidden “viewer” function allowed Company X to secretly access users’ in-game items without their knowledge
• Evidence destruction: Company X was systematically and organizationally destroying evidence

The Business Impact on Company X

As these posts spread across gaming communities and social media platforms, Company X suffered severe business damage. Daily active users fell by approximately 30%. Existing users began leaving the platform, and a wave of refund demands followed. The company’s online reputation was significantly damaged at a time when player trust was already fragile.

2. What Is Business Interference by False Facts Under South Korean Law?

Business interference is codified in Article 314 of the Criminal Act of South Korea. Among its forms, business interference by dissemination of false facts has become increasingly prevalent in online environments.

The Governing Statute

Article 314(1) of the Criminal Act provides that a person who interferes with another’s business “by the methods prescribed in Article 313” — namely, by spreading false facts or using other fraudulent means — shall be punished by imprisonment for not more than five years or by a fine not exceeding KRW 15 million (Criminal Act, Articles 313 and 314(1)).

Where false facts are disseminated via an information and communications network, Article 70(2) of the Act on Promotion of Information and Communications Network Utilization and Information Protection (ICN Act) may also apply, carrying a maximum penalty of seven years imprisonment, ten years of suspension of qualifications, or a fine of up to KRW 50 million.

What Does “Spreading False Facts” Mean?

The Supreme Court of Korea has held that “spreading false facts” in the context of business interference means disseminating facts that differ from objective reality to an unspecified number of people, and that the perpetrator must have actively recognized the falsity of the information at the time of dissemination (Supreme Court Decision 93Do1278, January 28, 1994; Supreme Court Decision 2008Do6728, November 27, 2008).

It is not necessary that the core facts be entirely false. Even where the underlying facts are true, adding false information to a sufficient degree such that there is a risk of interfering with another’s business will satisfy this element. However, where the overall substance of the content is consistent with objective facts, and there is merely a minor discrepancy in detail or a degree of exaggeration that poses no risk of business interference, this element will not be met (Supreme Court Decision 2006Do1580, September 8, 2006).

Distinguishing Facts from Opinions

Mere expressions of opinion or value judgments do not constitute false facts. Whether a statement constitutes a fact or an opinion is assessed by considering the ordinary meaning and usage of the language, the capacity for verification, the context in which it was made, and the overall social circumstances at the time (Supreme Court Decision 2021Do6634, September 30, 2021; Supreme Court Decision 2016Do19159, April 13, 2017).

In the Company X case, Y’s statements — “a winning bot exists” and “a viewer function exists” — were specific factual assertions, not mere expressions of concern or opinion. Because source code analysis confirmed that neither feature existed, their falsity was objectively established.

3. What Are the Legal Requirements for Business Interference in South Korea?

Four elements must all be satisfied for business interference by false facts to be established under South Korean criminal law.

Why Actual Damage Is Not Required

Business interference under South Korean law is an abstract endangerment offense, not a result offense. It is not necessary that actual interference occur — it is sufficient that a risk of interference arises (Criminal Act, Article 314(1)). The crime is complete at the moment false information is disseminated. Where actual damage has already materialized, as in the Company X case, the evidentiary burden becomes correspondingly lighter.

Why Insider Status Makes Intent Easier to Prove

The intent element requires proof that the perpetrator actively knew the information was false at the time of dissemination (Supreme Court Decision 93Do1278, January 28, 1994). For an outsider, this can be difficult to establish. For an insider, the analysis is fundamentally different. A current or former employee has direct, first-hand knowledge of the company’s systems and technical architecture. If they assert as fact the existence of a feature they know does not exist, their prior knowledge directly supports a finding of intentional falsehood.

4. How Have South Korean Courts Ruled on Similar Cases?

Business interference by false facts has evolved from a primarily offline phenomenon to one that plays out overwhelmingly in online environments. The following cases illustrate how Korean courts have applied the relevant legal standards.

Cases Where Conviction Was Upheld

False claims about a company’s financial condition after a payroll dispute

A former employee who had not received severance pay told the company’s staff and franchise operators that the company had “run out of money” and that “no further investment would be possible.” The court found that the defendant had disseminated false information about the company’s financial condition, creating a risk of interference with its employee and franchise management operations, and convicted the defendant of both credit damage and business interference (Daegu District Court, Decision 2022Gojeong378, May 4, 2023, fine of KRW 2 million).

This case closely parallels the structure of the Company X matter: a disgruntled former insider spreading materially false claims, resulting in criminal liability.

False information about a competitor posted on a blog

A defendant who posted false information about a competitor on a blog was convicted of business interference. The court found that the defendant had actively recognized the falsity of the content and had foreseen or was aware of the risk that the victim company’s business would be interfered with (Seoul Western District Court, Decision 2015No747, October 22, 2015).

False allegations against waste management companies posted on a government website

A defendant who posted allegations on a district government website and made statements before apartment residents claiming that waste management companies had engaged in fraud, falsified records, and price manipulation over multiple years was convicted of business interference, as the court found the allegations to be objectively false (Incheon District Court, Decision 2014No2129, March 19, 2015).

Cases Where Acquittal Was Upheld — The Strict Application of the Intent Requirement

SNS posts about alleged harmful ingredients in baby wipes

A defendant who posted on Twitter six times claiming that a company’s baby wipes contained a specific harmful chemical compound was acquitted. The court held that the overall substance of the posts — that the company’s wipes could cause skin problems — was consistent with objective facts (the company’s products had in fact been recalled for a different harmful substance), and that the prosecution had not proven beyond reasonable doubt that the defendant actively recognized the falsity of the specific chemical cited (Seoul High Court, Decision 2018No1809, October 18, 2018).

Online post claiming a redevelopment committee had been dissolved

A defendant who posted that “a majority of residents had voted against redevelopment, and the committee had been dissolved” — when in fact no dissolution had occurred and no majority had voted against the project — was nonetheless acquitted. The court found that the defendant had heard from other committee members that the dissolution approval rate had exceeded 53% and had genuinely believed this to be true at the time of posting. Where a person disseminates information they genuinely believe to be true, the intent element is not satisfied even if the information proves to be objectively false (Seoul Eastern District Court, Decision 2012Gojeong831 and 2012Gojeong1088 (consolidated), May 1, 2013).

Both acquittal cases confirm the same principle: even where the content is objectively false, business interference is not established unless the perpetrator actively recognized the falsity at the time of dissemination. This is precisely why Y’s status as a former insider was decisive in the Company X case — insider knowledge of system architecture left no credible basis for claiming genuine belief in the existence of features that did not exist.

5. How Should Companies Respond to Online Misinformation in South Korea?

When false information about a company spreads online, speed of response is critical to limiting damage. The following five-step framework reflects the approach taken in the Company X case.

Step 1: Preserve Evidence Immediately

Before posts are deleted or modified, preserve evidence through screenshots, notarization, or web archiving services. Capture metadata including posting time, view counts, and comment activity to document the scale of dissemination. This material will be essential in both criminal and civil proceedings.

Step 2: Request Interim Measures (Takedown)

Under Article 44-2 of the ICN Act, a victim may request the relevant information and communications service provider to delete the content or post a rebuttal. The provider must take interim measures without delay. The maximum duration of interim measures is 30 days. Prompt takedown requests are critical to preventing further spread.

Step 3: Prepare Technical Evidence of Falsity

In the Company X case, the legal team submitted the following materials to investigators:

• Source code analysis report: confirmed the absence of any winning bot functionality
• Server access log analysis: confirmed no unauthorized data access had occurred
• Internal records demonstrating that the activity Y characterized as “evidence destruction” was in fact routine system maintenance

Presenting technical evidence objectively, supported by expert opinion where available, significantly accelerates investigative decision-making.

Step 4: File a Criminal Complaint and Consider Civil Claims

A criminal complaint for business interference (Criminal Act, Article 314(1)) and defamation under the ICN Act (Article 70(2)) can be filed concurrently with civil damages claims. Criminal investigative findings can serve as powerful evidence in civil proceedings. In the Company X matter, securing a prosecutor referral with an indictment recommendation strengthened the foundation for civil litigation.

Step 5: Build Preventive Legal Structures

Proactive measures to reduce the risk of misinformation by departing employees include:

• Non-disclosure agreements (NDAs) executed at the time of departure, prohibiting disclosure of technical and operational information obtained during employment
• Online monitoring systems to detect false or damaging content about the company at an early stage
• Internal communication channels to identify and address employee grievances before they escalate
• Systematic retention of system logs and access records to provide objective rebuttal evidence if false claims arise

6. FAQ

Atlas Legal is a corporate law firm based in Incheon Songdo, South Korea, with dedicated practice groups in corporate advisory, corporate disputes, and white-collar criminal defense. Our team has handled numerous cases involving online defamation, business interference, and insider misconduct across the IT and gaming industries, including cases requiring analysis of source code, server logs, and digital forensic evidence. We provide comprehensive legal services in English to foreign nationals, foreign-invested companies, and international businesses operating in the Incheon Free Economic Zone and across South Korea.

※ The information provided in this article is for general informational purposes only and does not constitute legal advice. The applicable legal standards may vary depending on the specific facts and circumstances of each case. For advice specific to your situation, please consult a qualified attorney.