Use of inappropriate sales methods by Hung Ch'en Gas Safety Equipment Company in violation of the Fair Trade Law
Case:
Use of inappropriate sales methods by Hung Ch'en Gas Safety Equipment Company in violation of the Fair Trade Law
Key Words:
service call notice; gas safety cut-off valve
Reference:
Fair Trade Commission Decision of September 28, 2000 (the 464th Commissioners' Meeting); Disposition (89) Kung Chu Tzu No. 162
Industry:
Manufacturing of Other Unclassified Industrial Items (3999)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. This case originated when the Taipei City Bureau of Business Management ("the Bureau") reported to the Fair Trade Commission (the Commission) that the Hung Ch'en Gas Safety Equipment Company ("Hung Chen") was distributing notices for service calls on which were printed an order of the Bureau requiring installation of safety cut-off valves. However, the Bureau had never asked gas companies to take the responsibility of informing customers and arranging for installation in cases where the emergency cut-off valves were necessary; neither had it ordered main gas lines in public facilities to be equipped with such a cut-off valve. The Commission was requested to investigate. 2. The Investigation has shown that Hung Ch'en had tried to sell the cut-off valves by first printing a notice for a service call and dropped the notice at the residences of potential customers. The notice scheduled a date for a "free gas safety inspection," when a worker would come to perform the inspection and recommend the installation of the safety valve. The notices included some statements that were at variance with the facts, such as "The Taipei City Bureau of Business Management has ordered the installation of emergency cut-off valves, and the city government has ordered that the main gas lines of public facilities shall be equipped with cut-off valves." Under the circumstances, most consumers would be misled into believing that an order had come from an official agency about the installation the safety valves and this would affect their ability to make informed judgments about the transaction. Furthemorer, Hung Ch'en only employed four or five workers, and had no service departments in othe r districts. However, the notices it distributed used names such as "central management division" or "general service department." When customers asked whether or not they were some particular gas company (such as The Great Taipei Gas Corporation or the Yang Ming Shan Gas Company), the workers would answer evasively, and would say that the "Northern District Service Division" had already sent a notice and that the company had sent them out. All the methods described above were obviously intended to conceal from consumers that they were in fact not a pipeline gas company, and by way of misleading consumers, to take advantage of their "free gas safety inspections" to sell the safety cut-off valves. 3. In order to make sales of its product, Hung Ch'en distributed notices of services calls with false information, concealing the fact that it was not a pipeline gas company and making safety inspections. Consumers were misled with false information in a way that constitutes deceptive practices sufficient to affect the trading order in violation of Article 24 of the Fair Trade Law. Pursuant to the fore part of Article 41 of the same Law, they were immediately ordered to cease said deceptive practices. Further, in consideration of the small size of the company, the minimal profits gained and the fact that it was a first offence, they were also, pursuant to the same clause, fined a sum of NT$500,000. Appendix: Hung Ch'en Gas Safety Equipment Company's Uniform Invoice Number: 16794625 Summarized by Huang Chung Chieh; Supervised by Gso Tien Liant