Violation of the Fair Trade Law by multi-level sales enterprise Herbalife Taiwan, Inc.

Chinese Taipei

Case:

Violation of the Fair Trade Law by multi-level sales enterprise Herbalife Taiwan, Inc.

Key Words:

Herbalife Taiwan, Inc., handling charge for credit card payment.

Reference:

Fair Trade Commission Decision of January 6, 2005 (the 687th Commissioners' Meeting); Disposition Kung Ch’u Tzu No. 091001

Industry:

Direct Selling Establishment (4812)

Relevant Laws:

Article 23 of the Fair Trade Law

Summary:

1. This case arose from Herbalife Taiwan Inc. (hereinafter referred to as “Herbalife”) buying back goods after the participant terminates agreement. Herbalife deducted a 2% handling charges from every credit card refund, if the participant had paid for the purchased goods with credit card and requested for Herbalife’s buy-back of the goods after the credit card payment’s refundable period. Herbalife stated that when a participants pays for the goods by credit cards, the credit card’s issuing bank, for each payment transaction, would charge a 2% of total transaction amount as handling charge. If the participant requests Herbalife to buy back the goods after the credit card payment’s refundable period, Herbalife will not be unable to cancel the transaction with the issuing bank. Since such fee is incurred by the user himself, a handling charge of 2% of total transaction amount is deducted from the refund.
   
2. The Article 23-2 (2) of the Fair Trade Law stipulates at the time that the participant terminates the agreement, the multi-level sales enterprise shall buy back the goods then possessed by the participant, provided that it may only be deducted “the bonuses or remuneration paid to the participant for the purchase” and “the amount of the decreased value of the goods”. The 2% handling charge as deducted by Herbalife Taiwan Inc. is not a statutory deductible item. Such violation cannot be justified on the ground that the fee is incurred by the user himself. The conduct of Herbalife violated Article 23-2 (2) of the Fair Trade Law. Therefore, in accordance with the forepart of Article 42 (2) of the Fair Trade Law, this Commission imposed an administrative fine of NT$ 200,000 on said enterprise and ordered it to immediately cease the unlawful conduct.

Summarized by Wang, Horng-Shiuan
Supervised by Hsu, Hung-Jen

Appendix:

Herbalife Taiwan Inc.’s Uniform Invoice Number: 89405264