Violation of Supervisory Regulation of Multi-Level Sales by Taiwan First, Inc.
Chinese Taipei
Case:
Violation of Supervisory Regulation of Multi-Level Sales by Taiwan First, Inc.
Key Words:
multi-level sales, report of change, discontinue membership, return merchandise and collect refund of amount paid
Reference:
Fair Trade Commission Decision of February 10, 1999 (380th Commissioner Meeting); (88) Kung Ch'u Tzu No. 020
Industry:
Combined Merchandise Wholesaling (5110)
Relevant Law:
Articles 23(2) and 42 of the Fair Trade Law; Article 3(2) and 5(1) of the Supervisory Regulation of Multi-Level Sales
Summary:
Taiwan First Inc. (Taiwan First), a multi-level sales enterprise, modified content in its operational handbook regarding the conditions of constituting a participation. Prior to implementing the modification, it had not registered the modification with the central competent authority nor had it defined conditions regarding rights of participants to cancel or terminate the contract, return merchandise and collect amounts paid in the case of discontinuation of membership, and related rights and duties. This violated Articles 3(2) and 5(1) of the Supervisory Regulation of Multi-Level Sales (SRMS) as authorized by Article 23(2) of the Fair Trade Law. Taiwan First said that it had not reported the modification prior to implementation due to negligence of administrative personnel and that it had disciplined the related administrative personnel etc. But this does not change the fact that it was illegal to have not made the report before implementation and thus does not absolve it of responsibility. The handbook also stated that such applications for return of merchandise would not be processed over four months (120 days) after discontinuation of membership. It then stated that applications would not be processed after more than 30 days. This violated Article 5 of the SRMS. Taiwan First said it did this mainly to avoid unnecessary disputes caused by customers using false names and that purchases by its members were mainly for consumption use, etc. This was obviously an excuse to shift responsibility and was unacceptable. Taiwan First also provided examples of when it actually processed applications for the return of merchandise but this does not change the fact that it had already violated Article 5 of the SRMS.
Previously, Taiwan First had not reported to the Fair Trade Commission prior to implementing multi-level sales and violated Article 3(1) of the SRMS. It was punished with a fine of NT$100,000 by the FTC on January 13, 1999. As this is the second violation, and considering its scale of business, number of participants, the considerable degree to which the rights of its participants could be affected, and that there was an immediate correction of the act, the FTC punished Taiwan First with a NT$300,000 fine pursuant to Article 42 of the FTL.
Summarized by Yeh Tien-fu
Supervised by Yang Chia-chun
Appendix:
Taiwan First Inc.'s Uniform Invoice No.: 16108359