Multi-level sales operations by the I
F International Co. Ltd. in violation of the Fair Trade Law and the Supervisory
Regulations Governing Multi-Level Sales
Chinese Taipei
Case:
Multi-level sales operations by the I F International Co. Ltd. in violation
of the Fair Trade Law and the Supervisory Regulations Governing Multi-Level
Sales
Key Words:
multi-level sales, failure to report changes for recordation, termination
of contract
Reference:
Fair Trade Commission Decision of May 3, 2000 (the 443rd Commissioners' Meeting);
Disposition (89) Kung Ch'u Tzu No. 8808638-004
Industry:
other automobile service (8919)
Relevant Laws:
Article 23ter(2)
of the Fair Trade Law; pre-amendment Article 3(2)
and post-amendment Articles 11(1)
and 13(1)
of the Supervisory Regulations Governing Multi-Level Sales
Summary:
- When the I F International Co., Ltd. (I F International) in October of
1998 added new products to its line, including its "An-hsin" card,
water purifier, and products for everyday use, it did not report changes in
its business to the Commission for recordation in violation of Article 3(2)
of the pre-amendment Supervisory Regulations Governing Multi-Level Sales (the
Regulations). I F International also held the products offered in association
with its "Hsi-fu" discount card to be unique, and from 15 May 1999,
its "Hsi-fu" membership application contract stated "The trial
period for this card is 14 days; after the trial period has passed, no applications
for refunds will be accepted." This clause was also not reported to the
Commission prior to its implementation, in violation of Article 3(2) of the
pre-amendment Regulations. In addition, this action also violated Article
13(1) of the post-amendment Regulations, which state that the conditions for
participants' withdrawal and the associated rights and obligations shall include
Article 13(5): "for participants who terminate their contract under the
terms of the preceding subparagraph, the multi-level sales organization shall,
within 30 days of such termination, buy back the participant's previously
purchased goods at 90 percent of their original price . . .." In fact,
actual handling of participants' withdrawals was based on the clause, "the
trial period for this card is 14 days; after the trial period has passed,
no applications for refunds will be accepted," and for any participants
who joined after 15 May 1999, no termination of contract or return of cards
was accepted, in violation of article 23ter(2) of the post-amendment Fair
Trade Law.
- In the distributor's handbook, I F International also attached "An
Introduction to the 'Automotive Friend'" as part of its introduction
to the featured products and services associated with the "Hsi-fu"
card. It introduced the island-wide road services team of this auto club as
being "linked to the GPS satellite navigation and positioning system."
However, due to the fact that the Ministry of Transportation and Communications
has not yet authorized such use of GPS frequencies, the claims made for the
road services team in the introduction were not factual and violated the provisions
of the Article 11(1) of the post-amendment Regulations, which state that a
multi-level sales enterprise shall provide information on the types, functions,
qualities, prices, and uses of its goods or services, and "shall make
no false, dissembling, or misleading representations" in regard to these.
- In conclusion, I F International Co., Ltd. violated Article 3(2) of the
pre-amendment Regulations, Article 11(1) and 13(1) of the post-amendment Regulations,
and Article 23ter(2) of the Fair Trade Law. In consideration of the number
of its participants, its operational status, revenues, and the degree of injury
to the trading order caused by its unlawful conduct, it was assessed a fine
of 500,000 New Taiwan Dollars and ordered to cease its unlawful conduct in
accordance with the forepart of Articles 41, 42(2), and 42(3) of the Fair
Trade Law.
Appendix:
I F International Co. Ltd.'s Uniform Invoice Number: 16367051
Summarized by Li Ya-ching
Supervised by Lin Ch'ing-tang
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