Ju Sheng International Limited Co. violated Article 3 (1) of the Supervisory Regulation of Multi-level Sales

Chinese Taipei

Case:

Ju Sheng International Limited Co. violated Article 3 (1) of the Supervisory Regulation of Multi-level Sales

Key Words:

dal system, Principles in Handling Investigation Operation of Multi-level Sales Cases

Reference:

The Fair Trade Commission Decision of May 28, 1997 (the 291st Commission Meeting); Disposition of (86)-Kung-Tsu-057

Industry:

Retailing (4020)

Relevant Laws:

Article 23(2) of the Fair Trade Law

Summary:

1. This case was originated from a complaint alleging that Ju Sheng International Limited Co. was engaging in illegal multi-level sales in violation of the Fair Trade Law. The Fair Trade Commission’s ( FTC’s) investigation showed that Ju Sheng Co. reported to this Commission for its engagement in multi-level sales on December 2, 1996. Later, it withdrew the report by a letter dated December 14. However, with regard to whether it has ever engaged in multi-level sales, it was found by the officials of the FTC on January 27, 1997 that such company was still engaging in multi-level sales as reported originally.

2. A further investigation showed that Ju Sheng Co. adopted the bonus system of "One Person Two Friends Imbalanced Dual System". When this Commission dispatched officials to its business place for investigation, it was found that there were about 50 direct-sales distributors. However, it has not calculated the bonus according to the above method yet. The company expressed that it would discontinue all the multi-level sales the next day. However, it, later on, reported to the FTC again on January 30 with a letter similar to the earlier one that the company will be in operation. After Ju Sheng Co. made the report, it sent a letter to the FTC again for withdrawal of the previous report . After the investigation by the FTC, it claimed that it would discontinue such behavior. However, it further sent a letter to report again and the reported bonus system of the multi-level sales was still controversial. It made the reports and withdrew them repeatedly. Later, the company voluntarily came to the FTC to provide an explanation on April 15. It stated that the contents of the report dated January 30 were issued by other shareholders of the company. The company indeed did not engage in multi-level sales, so it later sent a letter to withdraw the report.

3. According to the regulation of Article 3(1) of the "Supervisory Regulation of Multi-level Sales", multi-level sales enterprise shall report to this Commission before they commence their business. Ju Sheng Co. although made prior report to FTC, it sent a letter for withdrawal later. In fact, it was still engaging multi-level sales in violation of Article 3(1). The violation was found to be true. According to Article 11 of the Simplified Operational Procedures of the "Principles in Handling Investigation Operation of Multi-level Sales Cases", the case was sent to reviewing commissioners, the Deputy Chairman and the Chairperson for their review, and a brief disposition was immediately prepared and sent out and the case was submitted to the 291st commission meeting for ratification. Further, in order to find out whether it discontinued its multi-level sales, this Commission dispatched officials on June 4 to confirm that it indeed did not engage in multi-level sales, and it was handling the withdrawal and return of the goods with the direct sales distributors who joined it previously.

4. In this case, Ju Sheng Co. repeatedly reported its engagement in multi-level sales, and continued such sales after its withdrawal of the report. After the FTC’s investigation, the company committed its violation of the Fair Trade Law. In order to protect the rights and benefits of the participants and the consumers, the FTC based on the simple operation procedures of the "Principles in Handling Investigation Operation of Multi-level Sales Cases" promptly impose proper sanction on the illegal businessmen so that other illegal businessmen may be warned and deterred.

Summarized by Yeh, Tien-Fu
Supervised by Tso, Tien-Liang

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