1. Background of the Study
Since the Fair Trade Law (hereinafter referred to as the FTL) was enforced in 1992, the Fair Trade Commission (hereinafter referred to as the FTC) has accumulated an abundance of law enforcement experiences and gradually matured in its capacity to handle various untruthful advertising cases by categorizing and analyzing the details of advertisements in accordance with the nature and practices of each industry. Slimming and beauty advertising is selected to be the subject of this study because the claims made by businesses offering slimming and beauty services are often targeted at physical improvements or changes that are closely related to the health of consumers. Furthermore, it is suitable to study this category of advertisements as the FTC also has already dealt with a large number of slimming and beauty advertising cases. The purpose of this study is to apply the FTC's accumulated experiences with such advertising and understanding of the characteristics in such advertisements to explain the background of the advertising behavior as well as to sort out and analyze the decided cases systematically to establish a set of criteria for future law enforcement of the FTC on slimming and beauty service advertising cases .
2. Methodology and Process Employed by the Study
Literature analysis and case analysis are the two main approaches adopted in this study. The former is applied to examine commonly encountered untruthful advertising for slimming and beauty services with the purpose of explaining the particularities in untruthful slimming and beauty advertising today. The dispositions the FTC has handed out and related court verdicts are also analyzed to sort out the FTC's regulatory measures against untruthful slimming and beauty advertising and the problems arising from the application of related laws. At the same time, case analysis approach is also employed to establish the statistical foundation that provides the basis for the discussion of related problems. This study is divided into four chapters. Chapter 1 is the introduction. Chapter 2 defines the scope of study, that is, the definition of slimming and beauty services and related issues, as well as a description of the framework of current regulations on such conduct. In Chapter 3, a fundamental statistical analysis of the cases the FTC has sanctioned is conducted and the controversies derived from the application of related regulations are scrutinized and reviewed. Finally, conclusions and suggestions are presented in Chapter 4 of this study.
3. Main Suggestions
Based on the analysis and review results of this study, the following suggestions are offered for the regulation and law enforcement against untruthful slimming and beauty advertising:
(1) In the market of slimming and beauty service business, the effect of the product or service is an important factor in consumers' decision of whether to make the purchase. A business posting false and untrue advertising for the effect of its product or service is very likely to jeopardize the interests of consumers and its competitors. By the type of performance advertised, slimming and beauty advertisements can be divided into for body slimming and sculpting, breast enlargement, detoxification, and skin whitening and improvement. When judging whether slimming or beauty advertisements are untruthful, the FTC normally adopts the advisory opinions of the Department of Health (hereinafter referred to as the DOH) and, according to the most appropriate agency theory, the DOH is indeed more qualified than the FTC to make such professional judgments. However, the present health regulations being enforced by the DOH do not include any provisions regarding advertising for non-medical products claimed to have slimming and beauty effects. Yet, as the effects of body slimming or sculpting, breast enlargement, height enhancement and beautification advertised for such products or services will definitely have certain impact on the human body, the DOH should be made the competent authority.
(2) Since the effects claimed in slimming and beauty advertising will have certain impact on the human body, hiring public figures, professionals or consumers allegedly having used the products or services as endorsers or spokespersons to boost reputation and sales has become an increasingly common practice for slimming and beauty service businesses. With the amendment of the last section of Article 21 of the FTL on Nov. 23 2011, the civil liability of non-celebrity advertisement endorsers is limited to no more than ten times of the reward from the advertiser. However, this study suggests that, as the competition law authority, the FTC ought to focus on investigating the truthfulness of endorsed advertisements. The administrative liability of the endorsers in untruthful advertisements becomes an issue only when they are celebrities. In cases where the endorsement comes from non-celebrity people who are merely instruments of the advertiser, holding the advertiser responsible for the corresponding administrative liability ought to be enough to deter untruthful advertising. On the other hand, endorsers who are celebrities with certain social status and public credibility should assume higher-standard duty of care. It is therefore unacceptable when they claim their endorsement for a product or service they have never used has been done without the intention of untruthful advertising. Under such circumstances, Article 14 of the Administrative Penalty Act can be applied.
(3) Besides compensating for the damage to public interest, the administrative fines the FTC imposes on enterprises in violation of Article 21 of the FTL also carry the purpose of deterring all businesses from taking similar risk. If TV and online shopping operators establish agreements with the suppliers that the suppliers are to guarantee that the products and the corresponding advertisements involve no violation of related laws, based on the legal principle that "no one shall be allowed to cause damage to others with his or her conduct" and the principle of freedom of contract, such agreements are regarded as legally sound. Nevertheless, if TV and online shopping operators are directly involved in advertisement production or have the right to examine and screen the advertisements, it is then questionable whether they can use the agreement to extricate themselves and leave the supplier to shoulder the fine alone. Opinions from the academic circle suggest the FTC to describe in detail what it identifies as the behavior patterns of advertisers in future cases. In situations where the advertising images and texts are provided or produced by the suppliers alone and the marketing channel providers are unable to evaluate or revise the contents before or after the advertisements are posted, it is inappropriate to consider them the advertisers as they have not produced or approved the contents of the advertisements even when the marketing channel providers may have profited from the sales of the product. However, if a marketing channel provider has allowed its name to appear in an advertisement or participated in the sales of the product, it is definitely in a far better position than the trading counterparts (that is, regular consumers) to access and verify the information about the product. In addition, a marketing channel provider often can gain profits as high as tens of percents of the sales. Hence, all penalties imposed on such businesses in commensuration with the profits obtained have been well balanced. As for the question of leaving the supplier to shoulder the fine alone, it is fair to say that it may be a civil dispute to be decided by a civil court. However, if the FTC can describe in detail the behavior pattern of the advertiser in each disposition, the distribution of responsibility and the considerations behind the administrative fine decision, it will provide certain clarification when the case is reviewed in a civil court.