Yeou Fwu Photography Supply Co. makes false advertisement in violation of Article 21 of the Fair Trade law
Case:
Yeou Fwu Photography Supply Co. makes false advertisement in violation of Article 21 of the Fair Trade law
Key Words:
false advertising; concealing facts
Reference:
Fair Trade Commission Decision of April 5, 2000 (the 439th Commissioners' Meeting); Disposition (89) Kung Chu Tzu No. 047 toYeou Fwu Photography Supply Co.
Industry:
Photography equipm ent wholesaling (5280)
Relevant Laws:
Article 21(2) of the Fair Trade Law
Summary:
1. The Advertisements published by PresiCarre Corp. (PresiCarre) on 13 and 26 July 1999 for a Canon camera described it as the "new Sure Shot Owl Date" camera, whereas our investigation showed that the product has been refurbished. No change was made in the advertisement despite both verbal and written requests to do so were made to PresiCarre, leading to the controversy that consumers were being deliberately misled.2. In its defense, PresiCarre stated that "usually there is competition on the market between the authorized distributors and the parallel importers, and the two often make accusations that there are problems with each other's products. Furthermore, our price for the product in question was not noticeablely different . After this incident, our supplier, Yeou Fwu Photography Supply Co. (Yeou Fwu) has provided a "certificate of guarantee" proving that the products were genuine parallel imports, rather than second-hand ones. Even if there were statements or letters stating that the products were refurbished, no evidence to that effect was included in any form. We could not break our contract with Yeou Fwo and take the products off the shelf on the basis of one single letter." 3. The Fair Trade Commission (the Commission) investigation confirmed that the product was in fact refurbished. Yeou Fwu did not candidly disclose the facts, and, to the contrary, Yeou Fwu in fact deliberately concealed them. Under ordinary observation or even close inspection of the product, consumers would not likely perceive these products as being "refurbished," and since the products were also sold at large retail outlets where primarily new products are sold at the same time, they would definitely take them as the same new produc ts. Given that consumers base their decision to buy certain products at certain prices on the basis of their usefulness, being unknowingly led to buy used products at new prices is definitely unfair.Businesses and consumers all understand the principle that used products are priced lower than new ones, and if used products are distributed as new ones, legitimate operators may lose opportunities to do business with other trading counterparts. Therefore, this kind of conduct is disruptive for the trading order on the marketplace. In order to maintain the trading order and protect consumer interests, Yeou Fwu was fined NT$500,000 pursuant to Article 21(2) of the Fair Trade Law, and was ordered to immediately cease its false and misleading advertising and to recall and replace any of the products in question in circulation. (The latter decision was cancelled by the appeals committee due to inappropriate application of law, and a new disposition was issued within two months.)4. With regard to whether PresiCarre violated the law or engaged in serious misconducts, the following can be construed on the basis of PresiCarre's defense: When PresiCarre received the notice that the cameras were "refurbished," it immediately launched an internal investigation into the packaging and external appearance of the product and checked with Yeou Fwu on the matter. Yeou Fwu provided a "certificate of guarantee" indicating that the products were new and not used. Due to its contractual relationship with Yeou Fwu, PresiCarre did not immediately take the product off the shelf or change the packaging. Although PresiCarre did not seek further verification from the local Canon agent, it is not guilty of serious misconduct since authorized distributors and parallel importers often make accusations about each other's products. Furthermore, given Yeou Fwu's insistence that its cameras were genuine new products, there is no direct evidence to show that PresiCarre was either aware of the problem before the fact was uncov ered or that it engaged in serious misconduct afterwards. However, to protect the rights and interests of consumers, it is undeniable that volume retailers should pay due attention to their responsibilities in this regard. Consequently, a warning was issued and PresiCarre was urged to consider how to improve its internal controls.Appendix:PresiCarre Corp.'s Uniform Invoice Number: 22662550Yeou Fwu Photography Supply Co., Ltd.'s Uniform Invoice Number: 05077822Summarized by Mei-Tone Wang; Supervised by Jack T.H. Wu