Hung Lei Cosmetology Co., Ltd., violated the Fair Trade Law for making false and misleading representations in its advertisement about its service quality
Case:
Hung Lei Cosmetology Co., Ltd., violated the Fair Trade Law for making false and misleading representations in its advertisement about its service quality
Key Words:
false, misleading
Reference:
Fair Trade Commission Decision of May 19, 1999 (the 393rd Commissioners' Meeting), Disposition (88) Kung Ch'u Tzu No. 132
Industry:
Hair Dressing and Cosmetology (8991)
Relevant Laws:
Articles 21 (3) and, mutatis mutandis, Article 21(1) of the Fair Trade Law; the fore part of Article 41 of the Fair Trade Lawof the Fair Trade Law
Summary:
The advertisement also contained phrases such as "with 21 years of professional experience," and "the Hung Lei professional breast beautification organization celebrates its 21st anniversary this year." Although that those wordings might have constituted false advertisement was not specifically alleged in the complaint, the Commission had determined in its previous disposition dated July 25, 1996, Disposition (85) Kung Ch'u Tzu No. 124, that Hung Lei's promotional phrases, such as "Hung Lei's 18th anniversary", were false and misleading representation. Based on the same reason, the wordings of "21 years of professional experience" and "21st anniversary" published on 26 March 26, 1999 were also false and misleading representations.
According to the Liberty Times, which published the advertisement at issue, the advertisement was actually a commercial news release accompanied by photos and was published as a free service to a regular paying advertising customer at the customer's request. However, regardless of whether it was a paid advertisement or an unpaid commercial news release, it was still in nature an advertisement. The contents and photos of the advertisement under review was handed over to the Liberty Times as a commercial news release by Hung Lei's media contact person, and should be viewed as supplied by Hung Lei itself. Although it may not be an "advertisement" within its narrowest definition, Hung Lei's submission of the materials to the media for publication in the form of a report may still be an act that falls within the category of "any other way that is communicated to the public" stipulated in Article 21(1) of the Fair Trade Law, and should therefore be governed by the Law.
In dispositions (85) Kung Chu'u Tzu No. 124 and (88) Kung Ch'u Tzu No. 014 made in 1996 and 1999 respectively, the Commission had already found Hung Lei culpable, respectively, of false and misleading representations or symbols for its presentation of service prices and its claim of 18 years in business, in violation of Article 21 of the Fair Trade Law. Thus, the assertion in the disputed advertisement that Hung Lei "had never presented exaggerated or false advertisements, nor bamboozled consumers with confusing payment plans" was obviously false. That it had violated the Fair Trade Law is obvious. By the false presentations, Hung Lei instilled unfounded confidence among consumers in the quality of its services to the extent that could induce them to make misguided purchase decisions, which obviously constituted an violation of Article 21(3) and, mutatis mutandis, Article 21(1) of the Fair Trade Law.
Further, the presentations concerning the enterprise's anniversary and consecutive years in business were intended to give consumers the impression that it is a venerable firm with a long and trustworthy reputation, and thereby, to inspire their confidence in choosing its services. Although the wordings of "21 years of professional experience," and "Hung Lei's professional breast beautification organization celebrates its 21st anniversary this year" were not specifically alleged in the complaint, yet the Commission had determined in its previous disposition dated July 25, 1996, Disposition (85) Kung Ch'u Tzu No. 124, that Hung Lei's promotional slogan regarding "Hung Lei's 18th anniversary" was a false and misleading representation. Therefore, the assertions in the disputed advertisement regarding its "21 years of professional experience" and "21st anniversary" (published on March 26, 1999) were also false and misleading representations, in violation of Article 21(3) and, mutatis mutandis, Article 21(1) of the Fair Trade Law. Hung Lei, on the other than, asserted that although it failed to keep any related proving documentation, its responsible person, the cosmetologist Hung Lei had been engaged in the profession since 1977, and therefore had 21 years of experience in this business. However, the Commission, after consulting the Taipei Tax Bureau or the Taipei Bureau of Business Management, failed to discover any business registration or tax record for Hung Pei's Professional Beauty Salon during its investigation of the 1996 case (disposition [85] Kung Ch'u Tzu No. 124). To date, Hung Lei has still been unable to provide any credible documentation that could support its assertion.
In sum, Hung Lei made false and misleading presentations about its service
quality in the advertisement, in violation of Article 21(3) and, mutatis
mutandis, Article 21(1) of the Fair Trade Law. The advertisement was published
on March 26, 1999, after the amended Fair Trade Law taking effect in February
1999. Therefore, it should be penalized under the fore part of Article 41
of the amended law. After weighing the circumstances of the violation and
the scale of the business, a fine of NT$800,000 was imposed and Hung Lei
was ordered to publish a corrected version of the advertisement with the
following content:
The Fair Trade Commission has determined the following assertions published
by Hung Lei in a newspaper advertisement with the banner "Tell Hung
Lei How Perfect You Want to Be!!" on 26 March 1999 to be false and
misleading advertisements: "[Hung Lei] has never published exaggerated
or false advertisements, nor bamboozled consumers with confusing payment
plans"; "[Hung Lei] has amassed 21 years of professional experience";
and "the Hung Lei professional breast beautification organization celebrates
its 21st anniversary this year." This corrective advertisement is published
specifically under the instructions of the Fair Trade Commission.
Summarized by Li Wen-hsiu;
Supervised by Chu Wei-ch'ing
Appendix:
Hung Lei Cosmetology Co., Ltd.'s Uniform Invoice Number: 30969596