Li Yen Medical Instruments and Hung Chien Co. allegedly engaged in improper sales (marketing) practices in violation of the Fair Trade Law.
Case:
Li Yen Medical Instruments and Hung Chien Co. allegedly engaged in improper sales (marketing) practices in violation of the Fair Trade Law.
Key Words:
medical instruments, improper sales (marketing) practices, consumer's right to choose
Reference:
Fair Trade Commission Decision of January 11, 2001 (the 480th Commissioners' Meeting); Disposition (90) Kung Ch'u Tzu No. 017
Industry:
Pharmaceutical and Medical Products Retailing Industry (5381)
Relevant Law:
Article 24 of the Fair Trade Law
Summary:
1. Members of the public reported that sales representatives of Li Yen Medical Instruments ("Li Yen") and Hsiung Chien Co. ("Hsiung Chien") willfully concealed their sales objective and often dressed in a way that made them appear to be medical professionals or nurses. Claiming to have been sent by a clinic or other health care institution to provide medical services, sales representatives would pitch their products to aging veterans in a fraudulent manner. They would also claim the products they were selling could cure illnesses and provided health benefits. 2. According to the investigation by the Fair Trade Commission, the FTC found as follows: (1) According to the Department of Health, the magnetic wave device marketed by Li Yen is not a "medical instrument" as defined in Article 13 of the Pharmaceutical Affairs Law and thus it may not make any claims of any curative effects as part of the product name, labeling or advertising. The Department of Health has also never assigned Li Yen or Hsiung Chien to tour Taoyuan County to conduct free medical services, whether in a support capacity or for the purpose of offering mobile health examinations. (2) Following an inquiry, it has been determined that the marketing practices of Li Yen and Hsiung Chien target elderly individuals who are more likely to suffer from chronic ailments and infirmities, are worried about their health, and are not well acquainted with up-to-date, accurate information on medical and pharmaceutical products. In addition, sales representatives claimed to be offering preferential treatments, claimed that conventional medical treatment would be more costly, and used other misleading and deceitful language in their sales pitches. These methods harmed consumers by impairing their right to choose and constituted deceptive and unfair practices. On the other hand, Li Yen and Hsiung Chien claimed that they had clearly informed potential customers that they were performing a product demonstration and indicating that their product is an item of healthy and fitness equipment which helps to promote blood circulation. They claimed that they never characterized the product as an item of medical equipment and that customers were told that they could return the product for a refund if unsatisfied. A survey of customers, however, indicates that 70 percent of respondents said sales representatives from the two companies claimed to have been sent by a clinic or other medical institution. More than half said the sales representative(s) wore clothing that made them appear to be medical professionals or nurses. More than 70 percent said sales representatives claimed that the equipment they were selling could treat illness and promote health and fitness, clear indication of improper marketing practices by the two companies in question. 3. Reasons for disposition: The fact that Li Yen and Hsiung Chien engaged in the marketing of a fitness equipment item under the pretense of health examinations has misled potential customers and impaired their ability to make a proper purchasing decision, constituting deceitful and unfair business practices. With regard to competitors in the same industry who do adhere to the principles of fair competition, the practices of the two companies in question also constitute an encroachment upon the function of fair competition in the marketplace and unethical business practices. After weighing the motivations of those involved in the aforementioned unlawful practices, their level of cooperation with the investigation, and previous offenses, the FTC, pursuant to Article 41 of the Fair Trade Law, imposed administrative fines of NT$1 million and NT$500,000 against Li Yen and Hsiung Chien, respectively. Appendix: Li Yen Medical Instruments' Uniform Invoice No.: 78686745 Hsiung Chien Co.'s Uniform Invoice No.: 74989472 Summarized by Hung, Hsuan; Supervised by Lin, Gin-Lan