Fair Trade Commission Policy Statements on the Sales Practices of Foreign Resort Membership Card

Since foreign resort membership cards is a relatively new product in Chinese Taipei , the average member of the public does not have a good grasp of the civil rights and obligations involved therein or the transaction details of the product. On the other hand, the sales enterprises do not have a full knowledge of the relevant regulations prescribed in the Fair Trade Law. Therefore, numerous disputes arise from this type of transaction. To maintain trading order of the market, this Commission has Promulgated the Policy Statement on the Sales Practices of Foreign Resort Membership Card passed by the 413th Commissioners' Meeting on October 6, 1999. Moreover, in tandem with the promulgation and enforcement of the Administrative Procedure Act, and with due consideration to the market conditions and transactional characteristics of such products, this Commission revised the aforesaid Principles in the 579th Commissioners' Meeting on December 12, 2002 into the Fair Trade Commission Policy Statement on the Saled Practices of Foreign Resort Membership Card to help the related enterprises in legal compliance and at the same time to serve as a reference in future case handling by this Commission. Additionally, after considering the current situation of the sales enterprises and this Commission's enforcement experience, partial content of the Policy Statement was amended in the 677th Commissioners' Meeting on October 28, 2004. Appendix 1 is a list of 10 notandums for purchasing foreign resort membership cards, and appendix 2 is a table listing the types of violations of the Fair Trade Law by the enterprises and the types of disputes not governed by the Fair Trade Law. These documents are intended to be references for both consumers and enterprises.

  (1) foreign resort: means a resort located outside of Chinese Taipei that provides lodging, recreation, leisure, or other specific uses to consumers (or a place such as a club that provides similar uses).

  (2) sales enterprise: an enterprise that sells foreign resort membership cards (or "membership passes" and so forth) in Chinese Taipei.

3.Types of practices by sales enterprises that violate Article 24 of the Fair Trade Law:

Article 24 of the Fair Trade Law provides, "In addition to what is provided for in this Law, no enterprise shall otherwise have any deceptive or obviously unfair conduct that is able to affect trading order." The term "deceptive conduct" means the act of using misleading method to positively deceive or passively conceal material trading information and causing a trading counterpart to enter into a transaction. The term "obviously unfair conduct" refers to the act of using improper pressure to a trading counterpart to impede the trading counterpart from freely deciding on the terms and conditions of trade and whether to engage in a transaction; for example, forcing or harassing a trading counterpart with a disturbing, importunate, or annoying method to make the trading counterpart enter into a transaction; or exploiting its market position to force a trading counterpart to accept unfair trading terms and conditions.

  (1) Provisions concerning sales enterprises soliciting consumers to enter into transactions

When employing mail, telephone, fax, or e-mail, a sales enterprise may not make any misleading representation by forging or concealing material information to solicit consumers to enter into transactions . A sales enterprise may not make representations regarding aleatory prize awards such as winning a prize or lottery if the enterprise has not actually held a raffle or lottery activity; otherwise, there is a likelihood of violation of Article 24 of the Fair Trade Law.

  (2) Provisions concerning telephone offer by sales enterprises

When soliciting consumers to enter into transactions by telephone, a sales enterprise is advised to inform the consumer of the following information, and to confirm in writing (fax, e-mail, mail letter, etc.) whether the consumer has clearly understood it:

  (i) Name of the caller and name of the sales enterprise he or she represents.

  (ii) That the purpose of the call is to sell foreign resort membership cards.

  (iii) Name and content of the foreign resort membership cards and other goods or services sold (including the price of the goods and location of the resort).

  (iv) Method and location of, and time required to be spent at, any activity promoting sale of the goods.

  (v) Conditions or consideration required for collecting any giveaways.

A sales enterprise that fails to disclose information under this paragraph, where sufficient to affect trading order, is likely to be in violation of Article 24 of the Fair Trade Law.

  (3) Provisions concerning information disclosure by sales enterprises

When engaging in sales conduct, a sales enterprise is advised to provide consumers with the following information, which is to be supplemented by written material (or a copy of form contract):

  (i) The legal status of the sales enterprise in the sales relationship; if the sales enterprise is a sales agent, it is advisable to provide a sales license attested by a Chinese Taipei liaison office overseas.

  (ii) Basic information on the foreign resort being sold, including the owner (operator) of the foreign resort, actual location, date of completion of construction, main facilities, and services provided.

  (iii) Rights and obligations of members of the foreign resort, and means of exercising them.

  (iv) If the foreign resort offers swap privileges, the method, fees, and terms and conditions for swapping.

  (v) Protections offered to foreign members by the laws and regulations of the country where the foreign resort is located, and conditions thereupon.

  (vi) Right to rescind the contract and method of rescission.

A sales enterprise that fails to disclose or makes false representations concerning information in this paragraph, where sufficient to affect trading order, is likely to be in violation of Article 24 of the Fair Trade Law.

  (4) Provisions concerning information disclosure related to sales contracts

Form contracts used by sales enterprises shall be written in the official language of Chinese Taipei. It is advisable that the content include all the information in Paragraph 3 herein, among which, the right to rescind the contract and the method of rescission shall be presented, in a font larger than the other content, a bold font or different colored font, with language similar to the following: "Under Article 19 of the Consumer Protection Act, the Member may, within seven days from receiving the goods or services (i.e. by the ___ day of _____, _____), return the goods or notify this Company (name of company and address for notice of rescission) in writing (such as by documented certified mail) of rescission of the purchase contract, without stating reasons or paying any expenses or purchase price". This shall be given on the spot to the consumer entering into the agreement, along with any other documents related to rights and obligations thereunder, to be kept by the consumer.

A sales enterprise that fails to disclose or makes false representations concerning information in this paragraph, where sufficient to affect trading order, is likely to be in violation of Article 24 of the Fair Trade Law.

  (5) Deceptive or obviously unfair conduct of sales enterprises that may affect trading order

  (i)  When engaging in sales conduct, a sales enterprise may not orally or in writing make any representations to consumers of the following kinds:

  (a) Misrepresent the actual conditions of the foreign resort, e.g. claim that the construction of the foreign resort is complete when actually it is not, conceal that the foreign resort has not obtained usage permission from local government authorities, exaggerate the rating and facilities of the foreign resort, continue to sell time-sharing rights to the foreign resort in excess of the units that are actually utilizable.

  (b) Misrepresent limited-time discount prices for the foreign resort membership cards, e.g. claim that a discount price is available only if the contract is signed on the same day whereas in fact consumers signing on another day may enjoy the same discount.

  (c) Misrepresent interests relating to rental, re-sale, or appreciation in value of the foreign resort membership cards, e.g. if there have not been widespread cases of members successfully renting or reselling membership cards, or reselling them at a profit due to appreciation in value, improper representations such as the above shall not be made.

  (d) Misrepresent the market value of the foreign resort membership cards, e.g. claim that the membership cards have substantial market value when in fact the membership cards are not yet in circulation on the market or they are quoted for sale on the market but no trade in them is actually occurring.

  (e) Misrepresent exclusive privileges of members, e.g. improperly guarantee the use of a foreign resort or facilities thereof that in actuality members are unable to use or swap for the use of, conceal restrictions or fees imposed on the use of facilities of the foreign resort, conceal restrictive conditions and fees imposed on swapping of foreign resort [time].

  (ii) Before a consumer has read the contract, it is not advisable to have the consumer pay an advance deposit in cash, credit card, promissory note, or other form, e.g. in practices such as asking consumers to pay a deposit before allowing them to read the contract.

A sales enterprise that engages in the above conduct, where sufficient to affect trading order, is likely to be in violation of Article 24 of the Fair Trade Law.

4.Penalties and legal liability for violating applicable provisions of the Fair Trade Law

  (1) This Commission may order any enterprise that violates any provision of the Fair Trade Law to cease or rectify its conduct or take necessary corrective action within a time prescribed in the order; in addition, it may assess upon such enterprise an administrative penalty of not less than fifty thousand nor more than twenty-five million New Taiwan Dollars. Shall such enterprise fail to cease or rectify the conduct or take necessary corrective action by the lapse of the prescribed period, this Commission may continue to order such enterprise to cease or rectify the conduct or take any necessary corrective action within the time prescribed in the order, and each time may successively assess an administrative penalty of not less than one hundred thousand nor more than fifty million New Taiwan Dollars until it ceases or rectifies its conduct or takes the necessary corrective action.

  (2) In addition to criminal or administrative liability under the law, an enterprise that violates the Fair Trade Law is also liable for damages as provided in Chapter V of the Law.

5.The Policy Statement merely sets out examples and explanations of some common types of practices of foreign resort membership card sales enterprises that may violate the Fair Trade Law. It is not an exhaustive treatment of the subject, and this Commission will supplement and amend it from time to time. The handling of individual cases must still be determined by the specific facts of the case.

[ Appendix 1 ]

Ten Points for Attention by Consumers in Purchasing Foreign Resort Membership Cards

  1. Awarding prizes is a common tactic in the sale of foreign resort membership cards. Be careful not to fall prey to such sales tactics.

  2. Stay clear and levelheaded when attending foreign resort membership card symposia, and don't be pressured or induced into signing a contract or paying a deposit.

  3. Pick up a sample contract and resort brochure, take them home, and study them carefully.

  4. Carefully evaluate whether time-sharing vacations are suited to you and your family's work, leisure, and travel habits, and economic means.

  5. Understand that after entering into a contract to purchase time-share resort rights (a foreign resort membership card), you will have to pay certain regular extra expenses, regardless of whether you use the time-share rights or card.

  6. Be aware that it will be necessary to follow certain procedures when applying to swap for different foreign resort time-share rights, and you will not necessarily be successful in swapping.

  7. Don't view the purchase of time-share resort rights as a kind of investment; resale will be difficult for as long as the resale market remains immature.

  8. Get an in-depth understanding of the operating condition and financial background of the enterprise selling the time-share resort rights (foreign resort membership cards).

  9. Get an understanding of laws of the home country of the foreign resort concerning protection of property of foreign nationals.

  10. Demand that any promises made orally by the foreign resort membership card sales enterprise be specified in writing in the contract.

[ Appendix 2]

Types of practices by sales enterprises of foreign resort membership cards that violate Article 24 of the Fair Trade Law