Fu Lung Construction Co., Ltd. made false advertising for promoting sales of units in its “Hsin Kai Yue” construction project in violation of the Fair Trade Law

Chinese Taipei

Fu Lung Construction Co., Ltd. made false advertising for promoting sales of units in its “Hsin Kai Yue” construction project in violation of the Fair Trade Law

Key Words:

false advertising, pre-sale units, hotel-style services, refrigerated waste processing equipment

Reference:

Fair Trade Commission Decision of January 16, 2003 (the 584th Commissioners' Meeting); Disposition (92) Kung Ch’u Tzu No. 092013

Industry:

Real Estate Investment (6611)

Relevant Law:

Article 21 of the Fair Trade Law

Summary:

1. A complaint from a member of the general public alleged that Fu Lung Construction Co., Ltd. (Fu Lung) advertised pre-sale units in its "Hsin Kai Yue" project describing the content of the services and facilities of said project as including "hotel-style services" and "refrigerated waste processing equipment," which statements were false and in violation of Article 21(1) of the Fair Trade Law.

2. Fu Lung’s advertising and promotional materials for the "menu of hotel-style services" offered at its project stated that said services included "room service, laundry service, housekeeping, meal delivery, transportation arrangement, airline reservation services, message services, postal services, utility bill payment services, fax and photocopying, hourly maid services, morning call, etc." Such emphasis on services in the advertisement, by the understanding of home-buyers in general, would lead to the notion that Fu Lung would be providing said hotel-style services. Fu Lung, however, failed to provide the given services, thus constituting unfair competitive practices involving false advertising. The representations in the disputed advertisement claiming to provide "hotel-style services" were therefore false and misleading representations that could cause Fu Lung’s trading counterparts to draw mistaken conclusions, causing them to suffer losses in transactions with Fu Lung, affecting the market competition.

3. Fu Lung’s disputed advertisement also claimed that the project was equipped with "refrigerated waste processing equipment located in the public area, which is in line with the government’s environmental quality policy and to maintain sanitation in the community." An inspection of the premises, however, revealed that Fu Lung had installed an air conditioner in the community garbage collection area and sought to pass it off as "refrigerated waste processing equipment," clearly falling short of residents' understanding and expectations. Consequently, Fu Lung's representation in the content of its advertisement claiming the project was equipped with "refrigerated waste processing equipment" caused a considerable number of ordinary or relevant members of the general public to form a mistaken assumption, and the representations in its advertisement were clearly at odds with reality to a point that exceeds the degree to which an ordinary trading counterpart is able to accept. Fu Lung's advertisement was therefore false and misleading with regard to its claims of "refrigerated waste processing equipment" and in violation of the provisions of Article 21(1) of the Fair Trade Law.

4. Grounds for disposition:
In dealing with pre-sale units, construction companies' claims in advertising and on posters with regard to the content of the project, its quality, the public facilities and full range of services offered and other relevant information, are intended to induce the trading counterparts to make a purchase. Therefore, the construction companies are obligated to ensure the accuracy of their advertisements. In the event the advertising claims fail to measure up to consumer expectations after the completion of construction, the said advertisement is censurable. In this case, Fu Lung's claims of "hotel-style services," and "refrigerated waste processing equipment" in its advertisement for pre-sale units in its "Hsin Kai Yue" project constituted false and misleading presentations in violation of the provisions of Article 21(1) of the Fair Trade Law. Under the provisions of the forepart of Article 41, Fu Lung was ordered to immediately cease its unlawful practices and was issued an administrative fine of NT$150,000.

Appendix:
Fu Lung Construction Co., Ltd.’s Uniform Invoice Number: 97332758

Summarized by Chen, Ru-Chen; Supervised by Chen, Yuhn-Shan