Disposition against Hsing Huan Realty, Ltd. for publishing false advertisements and engaging in conducts which were capable of affecting the trading order, in violation of Articles 21 and 24 of the Fair Trade Law
Case:
Disposition against Hsing Huan Realty, Ltd. for publishing false advertisements and engaging in conducts which were capable of affecting the trading order, in violation of Articles 21 and 24 of the Fair Trade Law
Key Words:
false and misleading presentations, deceptive conduct
Reference:
Fair Trade Commission Decision of February 2, 2000 (430th Commissioners' Meeting)
Industry:
Real Estate Brokerage (6812)
Relevant Laws:
Summary:
1. False advertising: (1) Hsing Huan Realty, Ltd. ("Hsing Huan") printed advertising literature containing the following statements regarding a piece of property for sale: "front [unit], first floor, 35 p'ing*, free parking space included." The homebuyer was attracted by the "parking space included," and contacted the respondent's [sales representative] handling the case through the contact information in the advertisement. The homebuyer took a tour of the property and inquired about the parking lot and total surface area. The respondent told him that the parking lot would be for exclusive use of the homebuyer and was included within the 35 p'ing, which also included the front and back yards. Upon subsequently consulting the homeowner and referring to the content of the Offer/Acceptance for Sale of Real Estate, however, the homebuyer learned that the parking space would not be owned by him but merely available for his use, and that the surface area specified in the Offer/Acceptance for Sale of Real Estate was not 35 p'ing as stated in the advertisement but actually only 28.15 p'ing, so the advertisement was obviously false. (2) The parking space mentioned in the advertisement was in fact effectively reserved for "exclusive use" by the resident of the first floor, in agreement with the wording of the Offer/Acceptance for Sale of Real Estate. However, the wording "free parking space included" in the advertisement would likely mislead an average homebuyer to believe he would have ownership rights to the parking space. As for the floor area, the respondent argued that the advertisement did not specifically promise "title" to the entire 35 p'ing. Based on customary trading practice, however, a prospective homebuyer would likely assume that he would obtain title to all 35 p'ing, which diverges by 24 percent from the actual 28.15 p'ing specified in the Offer/Acceptance for Sale of Real Estate and the official building floor plans. Given the costliness of housing transactions, such a discrepancy would be hard for an average member of the general public to swallow. Therefore, the advertisement constituted a false or misleading pr esentation under Article 21(1) of the Fair Trade Law (FTL). (3) By publishing a real estate advertisement claiming "35 p'ing*, free parking space included," Hsing Huan made a false and misleading presentation in violation of Article 21(1) of the FTL. After considering the respondent's motive, purpose, and anticipated benefit, and the degree to which its act harmed the trading order, the Fair Trade Commission (the Commission) imposed a fine of NT$100,000 pursuant to the forepart of Article 41 of the FTL. 2. Offer/Acceptance form: (1)An enterprise that causes a trading counterpart to engage in trade with it or to lose trading opportunities by misleading means such as deception or withholding material facts has engaged in a deceptive act capable of affecting trading order under Article 24 of the FTL. When the homebuyer toured the property, the respondent made representations that the homeowner was busily preparing to depart for overseas and that many other people were waiting to view the property, and then asked the homebuyer to sign an Offer/Acceptance for Sale of Real Estate and pay a security deposit of NT$100,000. The respondent claimed that it did not offer the homebuyer the option of choosing the standard Offer form drafted by the Ministry of the Interior (MOI) because its own Offer/Acceptance for Sale of Real Estate was largely identical to the MOI's. (2) The respondent's Offer/Acceptance for Sale of Real Estate was in fact a brokerage fee contract, and differed from the MOI's standard Offer form, which imposes no brokerage fee and includes a rescission clause. When the respondent requested a brokerage fee, it failed to provide the MOI's version for reference and comparison by the homebuyer, and instead requested outright that the homebuyer sign a brokerage contract and pay a brokerage fee. It thus failed to fully disclose relevant trading information. The tactic of withholding material information to extract a brokerage fee constitutes deceptive conduct capable of affecting the trading order. (3) Hsing Huan's failure, when it requested the brokerage fee, to inform the homebuyer that he had the alternative of using the MOI's Offer form constituted a deceptive act capable of affecting the trading order in violation of Article 24 of the FTL. The act was all the more reprehensible in that acts of the same kind had been specifically corrected by the Commission in previous industry-wide corrective measures that the respondent failed to observe. Accordingly, after taking into consideration the respondent's motives, its attitude following the act, and the degree of harm the act caused to trading order, the Commission decides to impose a fine of NT$100,000. *One p'ing is approximately equal to 36 square feet. Appendix: Hsing Huan Realty, Ltd.'s Uniform Invoice Number: 89821114 Summarized by Li Li-hsiu; Supervised by Hung Te-ch'ang