A complaint was filed against Pacific Rehouse Co, Ltd. for its false advertising on the transaction price

Chinese Taipei

Case:

A complaint was filed against Pacific Rehouse Co, Ltd. for its false advertising on the transaction price

Key Words:

market transaction information, misleading, transaction ping (one ping is equivalent to about 36 square feet) number

Reference:

Fair Trade Commission Decision of July 30, 1997 (the 300th Commission Meeting); Disposition (86) Kung Ch'u Tzu No. 115

Industry:

Real Estate Intermediary Industry (6812)

Relevant Laws:

Article 21 of the Fair Trade Law

Summary:

1.A consumer filed a complaint to the Fair Trade Commission (FTC) against the Cheng Kung branch of Pacific Rehouse Co, Ltd. (hereinafter, "Pacific") for providing false information in the“Market Transaction Information” published by Pacific. Because of the false information, the complainant bought real estate for a price above the market value. In the Market Transaction Information released in May and August of 1996, Pacific calculating the price for each ping (one ping is equivalent to about 36 square feet) on a different basis, and deliberately jacked up the transaction price for each ping to mislead the consumer , which was colaimed to be a violation of the Fair Trade Law.

2.Pacific provided the following explanation:

Regarding the different calculation basis of the transaction price/per ping for the two properties located respectively at 4F-1, No. 53, Tse Ch'iang Rd., and at 5F-2, No. 53, Tse Ch'iang Rd., Taoyuan City, which released in “ Pacific's Market Transaction Information” on August 10, 1996, the price of the former property was calculated on the basis of its main structure, and the latter property was priced on the basis of its main structure and public facilities. Such mistake was caused by an employee negligently mistyping the information. After this mistake, additional notes were provided at the end of each property file to inform the consumer whether such property included a parking space. Pacific claimed that since the advertisement was printed after the complainant closed his deal, it could not have affected his purchase decision.

3.Current construction laws and regulations contain no explicit provisions governing the transaction price per ping. Therefore, whether the transaction price per ping only refers to the main structure or includes ancillary structures, public facilities or parking spaces should be clearly specified. Apparently, different calculation basis will affect the unit price for each ping. However, Pacific used a different calculation basis for properties on different floors of the same building in its Market Transaction Information which undermined the accuracy of the transaction prices. This will obviously create misconception in the public referring to such information with respect to the actual transaction prices. As a result, the misinformed public may make wrong decisions in buying or selling real estate. Therefore, regardless of Pacific's motive, the advertisement at issue obviously contains false and misleading representations in violation of Article 21 of the Fair Trade Law.

Summarized by Kung, Ch'in-lung
Supervised by Wu, Tsuei-feng

Appendix:
The Pacific Rehouse Co. Ltd.’s Uniform Invoice Number: 21244538

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