American Express Company Taiwan was complained through false advertising for traveler's checks in violation of Article 21 of the Fair Trade law
Chinese Taipei
American Express Company Taiwan was complained through false advertising for traveler's checks in violation of Article 21 of the Fair Trade law
Key Words:
American Express, traveler's check, false advertising, warning
Reference:
Fair Trade Commission Decision of March 13, 2003 (the 592nd Commissioners' Meeting); Letters Kung Tsan Tzu No. 0920002660 and 0920003131
Industry:
Foreign Banks (6213)
Relevant Law:
Article 21 of the Fair Trade Law
Summary:
1. This case originated from a complaint alleging that American Express Company Taiwan (the respondent) broadcast its traveler's check television commercials with the intent of making known to the public that clients whose American Express traveler's checks were lost or stolen on their trips abroad would generally receive re-issued checks within 24 hours. The Complainant purchased traveler's checks totaling US$20,000 (NT$700,420) from the respondent at the International Commercial Bank of China, Sanchung branch, and Chinatrust Commercial Bank, Chungyang branch on 16 April 2002, and lost them in Sanchung around 11 p.m. the same day. He promptly reported the loss of checks to the respondent, only to find that the latter refused to give compensation by reason of incomplete disclosure of information. The complainant hence accused the respondent of violating Article 21 of the Fair Trade Law by broadcasting exaggerated, false advertisements.
2. The Fair Trade Commission (FTC) requested the respondent to provide an explanation. The respondent said that “The words like 'receive re-issued traveler's checks usually within 24 hours' and 'receive compensation usually within 24 hours' after loss or theft of traveler's checks, as phrased in the contested advertisement, mean that upon an applicant's application for re-issuance of traveler's checks by phone, the respondent, in most cases, will make a decision on re-issuance within 24 hours after conducting a preliminary investigation into the case and finding no default, deceit, or other event requiring further investigation. When the applicant actually receives re-issued checks is conditional upon his/her choice of re-issuance method and location…” The respondent also submitted relevant information regarding applications for re-issuance of traveler's checks it handled from January to June 2002 in the Chinese Taipei region, and thus proved that over 60% of the applications were decided and traveler's checks re-issued within 24 hours. Reviewing the evidence provided by the respondent, it was concluded that phrases such as “receive compensation usually within 24 hours,” “receive re-issued traveler's checks usually within 24 hours,” “generally can receive re-issued traveler's checks within 24 hours,” and “receive re-issued traveler's checks in as fast as 24 hours” were based upon reasonable grounds, making it difficult to conclude that the respondent had violated the Fair Trade Law with false advertising.
3. However, the FTC deemed that, according to the respondent's print advertising and website, “Holders of American Express traveler's checks are not exposed to any risk of loss or theft of checks. Even if they are in a foreign country, they can still contact the local American Express's traveler's check claim service center and usually will receive compensation within 24 hours”; “American Express traveler's checks provide advantages beyond just security…Traveler's checks lost or stolen in a foreign country are usually re-issued within 24 hours”; and “The true meaning for the existence of American Express traveler's checks is that the checks are usually re-issued within 24 hours of loss or theft, whether at home or abroad.” Its television commercial also contained images showing “anxiety about loss of cash and ease after loss of American Express traveler's checks” and “a man handing over something like a traveler's check to a person reporting loss of American Express traveler's checks.” Overall, those advertisements were likely to leave an impression with consumers that “lost American Express traveler's checks are usually re-issued and new checks received within 24 hours.” However, when the applicant actually received the re-issued traveler's checks was conditional upon his/her choice of re-issuance method and the location. The respondent was possible in violation of the Fair Trade Law with its failure to disclose the information in the contested advertisement “[the phrase] 'receive re-issued traveler's checks (or compensation) usually within 24 hours' means [the respondent] usually decides to re-issue the checks within 24 hours.” To preserve the trading order and consumers' interests, the FTC issued a warning to the respondent, requesting it to clarify that promises such as “receive re-issued traveler's checks usually within 24 hours” and “receive compensation usually within 24 hours” meant that “a decision on re-issuance is made usually within 24 hours” and to set forth the specific measures an applicant had to take to receive re-issued traveler's checks (or compensation) within 24 hours, so as to avoid further dispute.
4. As to the dispute over compensation between the two parties in the present case, the respondent, in consideration of moral risk management and in accordance with the purchase agreement, had reserved the right to make a decision on compensation pursuant to its investigation. Such matters are outside of the scope of matters handled by the FTC, and hence no investigation will be conducted in that respect.
Summarized by Li, Shu-Hua; Supervised by Wu, Ting-Hung