A complaint is filed against British Isle of Man Company L.G.M. Limited, Taiwan Branch for allegedly violating the Fair Trade Law in its marketing scheme

Chinese Taipei

Case:

A complaint is filed against British Isle of Man Company L.G.M. Limited, Taiwan Branch for allegedly violating the Fair Trade Law in its marketing scheme

Key Words:

overseas vacation resort, membership card

Reference:

Fair Trade Commission Decision of April 28, 2005 (the 703rd Commissioners' Meeting); Disposition Kung Ch’u Tzu No. 094046

Industry:

International and General Tourist Hotels (5011)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. This case originated from a complaint filed by the general public indicating that British Isle of Man Company L.G.M. Limited, Taiwan Branch (hereinafter referred to as “L.G.M. Limited.”) has lured the general public to buy the overseas vacation resort’s membership card from the Company with rewards. Furthermore, the clients are requested to pay deposit with credit card before they read through contracts, such conduct has allegedly violated the Fair Trade Law.
   
2. Upon investigation, the Fair Trade Commission found that L.G.M. Limited is a sales agent of overseas vacation resort membership cards and promotes the sale of membership cards with cash reward plan. L.G.M. Limited claims that the overseas-incorporated Gai Nian Ji Hua Co., Ltd. (hereinafter referred to as Gai Nian Company) is managing the aforementioned plan and the purchaser of membership card can join the aforementioned plan, stresses that the purchaser can make an application with Gai Nian Company for a cash reward on the full amount of the purchase after joining the plan for five years. Such conduct has lured consumers in deciding to purchase the aforementioned membership cards. However, the investigation found that L.G.M. Limited actually is unable to guarantee the members will receive the full rewards and also not knowing the minimum rewards that the members can get back. In addition, according to the English version of “Registration Form for Proof of Rewards” that was provided by L.G.M. Limited and signed by the purchaser, the agreed terms and conditions at the back of the aforementioned registration form stipulate that the premise for members to receive cash rewards is that L.G.M. Limited must pay “Gai Nian Company”. But, L.G.M. Limited confessed that the company does not have money relation with Gai Nian Company. The aforementioned information is not disclosed to consumers and thus has led them into a relatively unfavorable position when they request cash reward from Gai Nian Company in the future. The aforementioned marketing tactic is a deceptive conduct that violates Article 24 of the Fair Trade Law.
   
3. In addition, the investigation also found that prior to receiving the agreements for reading through in detail, L.G.M. Limited has requested consumers to pay deposits with credit cards, leading the trading counterparts to make trading decisions under the circumstances without information transparency; such act is obviously unfair and sufficient to adversely affect trading order, also violated the provision of Article 24 of the Fair Trade Law.
   
4. Taking into consideration of the motive, purpose of L.G.M. Limited in committing unlawful acts, anticipated improper profits, thedegree and duration of the acts’ harm to trading order, and scale of operations, therefore, in accordance with the forepart of Article 41 of the Fair Trade Law, the Fair Trade Commission ordered to cease the aforementioned illegal act and imposed an administrative fine of NT$ 3 million on L.G.M. Limited.

Summarized by Chi, Hsuen-Li;
Supervised by Tai, Pei-Yi

Appendix:
L.G.M. Limited’s Uniform Invoice Number: 16447251