Kingtel Telecommunication Corporation made misleading statements about product functions in its mobile phone advertisements

Chinese Taipei

Case:

Kingtel Telecommunication Corporation made misleading statements about product functions in its mobile phone advertisements

Key Words:

mobile phone, accessory function, mislead

Reference:

Fair Trade Commission Decision of May 19, 1999 (the 393rd Commissioner's Meeting); Disposition (88) Kung Ch'u Tzu No. 056

Industry:

Communications (6320)

Relevant Laws:

Articles 21(1) and (pre-amendment) and 41 of the Fair Trade Law

Summary:

1. A complaint was filed that Kingtel Telecommunication Corporation ("Kingtel"), advertised that the many functions of the Bosch Dual-com 738 bi-frequency digital mobile phone ("Bosch Dual-com"), for which it was the sole distributor in Chinese Taipei, included being able to use Ni-Mh 1800 mAh batteries capable of providing 220 hours of operation and the option of using vibrating batteries. After the complainant purchased a Bosch Dual-com, he called Kingtel, which told him that they did not currently import the two types of batteries mentioned in the advertisement. The complainant believed that since Kingtel had no intention of importing the batteries, the advertisement in question was false.
   
   
2. Kingtel argued that the advertisement in question was taken from a global Bosch product catalog. The advertisement, Bosch stated, did in fact state that the Bosch Dual-com could be operated with Ni-Mh 1800 mAh for 220 hours and mentioned that the optional vibrating batteries. When Kingtel introduced the Bosch Dual-com, it also imported the Ni-Mh 1800 mAh and vibrating batteries. However, sales of the imported batteries were poor because their price was relatively high and because locally-made batteries had been dumped at low prices on the market. Consumer response was also poor. Consequently, after completing a test sales phase in May 1998, Kingtel decided not to import more batteries. If consumers wanted to buy the batteries, they could purchase them from the manufacturer.
   
   

3. The Fair Trade Commission(FTC) investigated and found that although the advertisements clearly indicated that the Bosch Dual-com could be operated for 220 hours with a Ni-Mh 1800 mAh battery and that consumers could select vibrating batteries, the advertisement did not clearly state that sales agents might not be able to make the two types of batteries available to customers. Further, the statements in the advertisement regarding the product's functionality were obviously misleading because when consumers buy mobile phones, the phone's functionality is usually an important consideration. One of the Bosch Dual-com's functions was the ability to operate for 220 hours if fitted with the Ni-Mh 1800 mAh battery. Kingtel, the exclusive agent in Chinese Taipei, clearly new that if it did not import the necessary batteries, this functionality would be lost. Nevertheless, even after it was impossible for consumers to buy the high performance Ni-Mh 1800 mAh battery, Kingtel, published information in its 27 September 1998 advertisement that caused a consumer to misapprehend the functionality of the related accessories and buy the product in question.

4. A subsequent telephone investigation and visit to Onking Chain-store Co., Ltd. and Arcoa Communications, the companies that placed the advertisement in question, revealed that the batteries in question were not immediately available to consumers. In addition the Bosch advertisement that Kingtel submitted to the FTC included a table for consumer reference that listed the names, volumes, and battery life of four types of batteries that could be used with the Bosch Dual-com. Kingtel, however, only listed the most powerful battery in its advertisement. This kind of selective publication makes it difficult indeed to lend credence to Kingtel's representation that it "reproduced [this claim] from the manufacturer's (Bosch) catalog." In doing so, Kingtel provided inaccurate transaction information that was sufficient to influence the reasonable judgment and purchasing decisions of an average member of the public with an ordinary level of knowledge and experience.

5. In sum, Kingtel placed an advertisement on page six of the 27 September 1998 China Times Express. The statements therein regarding the key functionality of the Bosch Dual-Com 738 bi-frequency mobile phone constituted a misleading representation in violation of Article 21(1) of the Fair Trade Law ('the Law"). The disposition in this case is made in accordance with the fore part Article 41 of the Law. Note that since the illegal acts in this case occurred in September 1998 and amendments to the Law took effect on 5 February 1999, the disposition of the acts in question is made under the Law at the time of the acts-i.e. the Law prior to its amendment.

Summarized by Li Wen-hsiu
Supervised by Chu Wei-ching

Appendix:
Kingtel Telecommunication Corporation's Uniform Invoice Number: 20894631

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