Case:
PChome Online Inc. and LISAN International Co. Ltd., made false representation in the “Amazing Abs Shaper” advertisement published on the Internet, a violation of Article 21 of the Fair Trade Law
Key Words:
e-Business, PChome online shopping for women, false advertisement
Reference:
Fair Trade Commission Decision of January 27, 2005 (the 690th Commissioners' Meeting); Disposition Kung Ch’u Tzu No. 094008
Industry:
Internet Information Supply Service (7321), Wholesale of Other Household Equipment and Supplies (4419)
Relevant Laws:
Article 21 of the Fair Trade Law
Summary:
(1) The production and publication process of the advertisement at issue: The investigation found that the “Cooperation Agreement for On-line Order” signed between LISAN Company and PChome Online International Information Co. Ltd. (hereinafter referred to as PChome Online Company) was an agreement for a general mode and terms of cooperation, not on a specially designated and specific product. The agreement covered a general range of products, and would be confirmed after both parties have agreed and “uploaded” the “document files” of the designated good on to the sales website. LISAN Company provided the aforementioned agreed document files (including “summary, feature, specification and instruction”).
(2) Trading manner with LISAN Company:
(i) With regard to the profit allocation between PChome Online Inc. and LISAN Company, in principle, LISAN Company gave PChome Online Company the delivery price and suggested selling price of the designated good. The completed online transactions will be calculated monthly for the payment, computed as total sales at wholesale price, to LISAN Company. LISAN Company issued sales invoices to PChome Online Inc., the difference between the total payment and the total amount of invoice was profit for PChome Online Inc..
(ii) Secondly, with regard to the delivery procedure for the physical advertised goods at issue, the investigation showed LISAN Company checked consumers’ orders through “online system” as constructed by PChome Online Inc. and mailed the ordered goods to consumers according to their order records. In pursuant to Article 2(1) of the aforementioned agreement, LISAN Company cannot turn down any shipments. After the shipment, PChome Online Inc. issued invoices to consumers. In brief, from the consumers’ standpoints, PChome Online Inc was the final seller of the advertised good at issue.
(3) PChome Online Inc. was the operator of on-line shopping mall: The
advertised good at issue was sold by PChome Online Inc., but, the advertised
content at issue was provided by LISAN Company and uploaded on to the shopper
web page constructed by PChome Online Inc. after confirmation. Generally
speaking, there was no restriction on the duration of posting the advertisement
at issue except for the occurrence of incident as stipulated in the agreement;
for example, the supplier was out of stock. Moreover, PChome Online Inc
was responsible for the construction, maintenance and management of the
trading platform and interface of the aforementioned website. Also, the
website was facilitated with online electronic payment mechanism and the
functions of retrieving and searching designated good or service. Next,
the investigation showed that in accordance with Article 7(6) of the Cooperation
Agreement signed between PChome Online Inc. and the supplier, “during the
valid period of the agreement, Party B (LISAN Company) agrees to collaborate
with Party A (PChome Online Inc.) to execute the planned marketing strategy
and the implementation of marketing plan.” In this case, the term “marketing
activities” referred to the production of additional marketing advertisements
(besides the web page at issue) and holding additional promotion activities,
for example, sending advertisement mail. In brief, PChome Online Inc. was
the operator of the shopping website at issue.
3. Grounds of Disposition
(1) PChome Online Inc. was the main entity responsible for the advertisement
at issue: PChome Online Inc. sold the advertised good at issue on its own
shopping website, provided LISAN Company a web page to post product’s summary
and instructions as disclosed in the disputed advertisement. The consumers,
in accordance with information that they have, perceived the advertisement
distributor and the product seller as the main entities responsible for
the advertisement. From consumers’ standpoint, PChome Online Inc. was the
distributor of the disputed advertised content as well as the seller of
the product. Furthermore, PChome Online Inc. was an active and direct beneficiary
of benefits resulted from the advertisement at issue, and certainly not
an intermediary. It is obvious that PChome Online Inc. was responsible for
the advertisement.
(2) LISAN Company also was the main entity responsible for the advertisement
at issue: The investigation showed that although LISAN Company was the supplier
of the advertised good at issue, the Company was not simply supplying goods
to PChome Online Inc. for sales but also providing the advertised good and
content at issue to PChome Online Inc. for production of the advertisement
at issue. Furthermore, the Company shared profits derived from the sales
of the advertised good at issue with PChome Online Inc. Both companies cooperated
with each other and were responsible for the advertisement at issue together.
Therefore, LISAN Company was the main entity responsible for the advertisement
at issue.
(3) The Department of Health, Executive Yuan has concluded that the content
of the disputed advertisement “dissolve excess fat through perspiration,
attain the result of weight reduction, body shaping and sports” was exaggerated
and false. It can be concluded that the aforementioned companies have published
false and misleading representation Internet advertisement; in violation
of the provision of Article 21(1) of the Fair Trade Law.
(4) After considering said enterprises’ motivation of the unlawful acts,
business scales, the circumstances of violations, and the cooperativeness
during the investigations, this Commission, in accordance with the forepart
of Article 41 of the Fair Trade Law, ordered PChome Online Inc. and LISAN
Company to immediately cease their unlawful acts and imposed administrative
fines of NT$ 250,000 and NT$ 50,000 respectively.
Summarized by Hsien, Cheng-Tu
Supervised by Yeh, Tine-Fu
Appendix:
PChome Online Inc.’s Uniform Invoice Number: 16606102
LISAN International Company’s Uniform Invoice Number: 70616117