Wonderswan Company Limited Taiwan Branch was complained for making false advertising in violation of Article 21 of the Fair Trade Act through the use of the “24 hour” indication on its signboard and membership cards

Chinese Taipei

Case:

Wonderswan Company Limited Taiwan Branch was complained for making false advertising in violation of Article 21 of the Fair Trade Act through the use of the “24 hour” indication on its signboard and membership cards

Key Words:

24 hour, advertising, misleading

Reference:

Fair Trade Commission Decision of January 16, 2003 (the 584th Commissioners' Meeting); Disposition (92) Kung Ch’u Tzu No. 092021

Industry:

Sports Grounds and Facilities (8742)

Relevant Law:

Article 21 of the Fair Trade Act

Summary:

1. A complaint was filed with the Fair Trade Commission (FTC), which in brief accused Wonderswan Company Limited, Taiwan Branch (“the respondent”) of deception in which the respondent asked customers to leave its facilities by 12:00 p.m., contrary to the 24-hour service sales pitch shown on the company’s storefront signboards and membership cards.

2.The FTC found that the respondent did have the indication “24 hour” printed on its storefront signboards and membership cards. The respondent argued that the “24 hour” indication was part of a combination of words and pictures in the design of the company’s advertisement consisting of the words “California,” male and female images, “fitness centers,” “24 hour fitness,” and the company’s logo (namely, a round “24 hour” mark with the word “fitness”), and “network.” The phrase “24 hour fitness network” in the design, it said, revealed only the extent of its affiliation with its parent company, 24 Hour Fitness Inc. of the United States. It further argued that the company had never claimed itself to be a 24-hour business, and that its business hours were clearly printed on all of its advertisements and promotional materials. The FTC, however, considered the company’s practices to be a sales pitch, and decided that it had not made an effort to clearly publicize its business hours. Furthermore, its customers would hardly have been able to tell from its advertisement that “24- hour fitness” signified its affiliation with 24 Hour Fitness Inc. of the United States rather than the provision of 24-hour service. The respondent claimed that it had had a notice board set up at the entrance of its Zhong Shao branch in Taipei since July 2000 indicating its business hours. The information regarding opening hours, however, was given only after customers initiated an inquiry, so that the use of “24 hour” on the storefront signboards was undeniably misleading. The respondent, therefore, had not sufficiently revealed to the public that “24 hour” was not an indication of its business hours. Since the respondent used “24 hour” as part of its trademark, it had the responsibility to disclose the fact that it did not offer 24-hour service and to make consumers aware of that fact. The respondent had not informed its customers sufficiently, and the omission of such important information would have been sufficient to cause mistaken perceptions or decisions. The “24 hour” mark was therefore determined by the FTC to be a false and misleading presentation.

3. Another part of the complaint claimed that members’ cards were marked “24 hour,” and that the Silver Card had an additional conditional clause promising “unlimited access except for 5:00 pm – 9:00 pm Mon-Fri, 1:00 pm - 5:00 pm, Sat-Sun,” whereas in fact the Silver Card holders would be asked to leave by 12:00 p.m. The respondent argued that its membership cards were classified as “Silver Cards,” “Gold Cards,” and “Platinum Cards” depending on the different restrictions of accessibility set by its individual branches. The business hours of the company were from 6:00 a.m. to 12:00 p.m. Monday through Saturday and 8:00 a.m. to 12:00 p.m. on Sunday. Conditions were attached to the rights of Silver Card holders, restricting them from access during peak hours while still allowing unrestricted access during business hours outside peak hours. The respondent said that the conditional clause did not conflict with the company’s stipulated business hours, nor did such a clause give any indication of 24-hour service. The FTC found, however, that as the membership cards were marked “24 hour,” they acted as advertisements transmitting a message that could be directly or indirectly received by a non-specified general public or the relevant sector of the public. Although the Silver Card bore a note indicating limited access, it was also marked with “24 hour.” Viewed in its entirety, the card gave the impression that the facilities were accessible 24 hours except for the periods specified as limited access. The marking of “24 hour” was sufficient to create a misperception on the part of a substantial portion of the general public or the relevant sector of the public. The respondent was considered to have violated Article 21 of the Fair Trade Act.

Appendix:
Wonderswan Company Limited Taiwan Branch’s Uniform Invoice Number: 70752073

Summarized by Yang, Shue-Jean; Supervised by Wu, Ting-Hung