Correction Program to sales activities of gas safety device enterprises
Chinese Taipei
Case:
Correction Program to sales activities of gas safety device enterprises
Key Words:
duty of disclosure, exaggerating and false advertisement
Reference:
Fair Trade Commission Decision of 23 August 1995 (the 202nd Commission Meeting); Letter (84) Kung Er Tzu No. 8623
Industry:
Unclassified Industrial Product Manufacturing Business (3999)
Relevant Laws:
Article 24 of the Fair Trade Law
Summary:
1. Background: Many consumers filed complaints to the Fair Trade Commission alleging that several gas safety device sales dealers send out postcards to consumers stating that they provide gas safety inspection service, which often misleads the consumers to believe they are from the gas supply company and therefore give them their trust. After inspection, these sales dealers would promote and sell their gas device by saying that the consumer's gas device was defective. Since the Fair Trade Commission (the FTC) has been handling such matters, it is found that these sales dealers tend to set up numerous small companies and keep changing company names and responsible persons in order to avoid the supervision from the judicial authority and the FTC. In this regard, it is necessary to ask the manufacturers and sales companies to cooperate and discipline themselves to stop such improper selling conduct. In addition, there are some manufacturers within said industry which name a disputable product, the "gas meter control regulator with overflow breaker as a "gas explosion prevention device" and use exaggerating and false language in advertisements. Whether this conduct constitutes "misrepresentation or misleading manifestation or expression" under Article 21 of the Fair Trade Law, will be handled by this Commission on a case by case basis within the scope of its authority. The FTC has, in order to give guidance to the businesses in the industry, drafted the "Inspection Key Points and Correction Program on Gas Device Business Conduct".
2. Scope of Guidance: The "Gas Safety Device" mentioned in the correction program means the liquid gas or natural gas controller which encompasses one of the functions as gas overflow breaker, storage meter, gas emission detector and timer, including those devices with supplemental functions for home gas pipe. The regulated objects of the correction program include the manufacturers, suppliers, dealers and retailers who engaged in producing or selling gas safety devices.
3. Conduct to be corrected: The majority of the gas safety device cases filed with the FTC fall into the categories of improper sales and improper product names and advertisement. The conduct to be corrected is thus categorized as the following four:
(1) Gas safety inspection shall be separated from sales conduct: If a gas safety device business intends to sell its products under the disguise of safety inspection, such conduct may constitute a deceptive conduct. The FTC has many times ruled that the gas safety device sellers are in violation of Article 24 of the Fair Trade Law (the FTL ) where the sellers sell gas safety device products in the name of gas safety inspection. In addition, according to Article 13(1)(ii) of the "Regulation on Gas Industry", a person must by admitted as a B Type safety technician to be qualified as a gas safety inspector. Hence, if a gas safety device seller intends to inspect gas pipes or other gas devices not sold by the seller in addition to it being necessary that the inspector has obtained the above-mentioned qualification, the consumer should also be informed of the business entity by which such inspector is employed.
(2) Gas accident prevention promotion shall be separated from sales conduct: There is nothing improper for an enterprise to support or participate in public benefit activities. But if an enterprise transmits questionnaires obtained in the course of public interest activities in which it or other entities have participated to gas consumers in the course of undertaking a contract or selling products, such actions may easily constitute unfair competition between enterprises and affect the trading order and hence should be prohibited. Promoting common knowledge of gas and gas accident prevention is one kind of public interest activity. If any gas safety device provider, while participating the promotion of gas accident prevention to unware consumers, represents that the government will mandatorily require every household to install the providers’ gas safety device, so as to induce the consumer to purchase the device, such conduct may constitute "deceptive acts" regulated by Article 24 of the Fair Trade Law.
(3) The sales information must be made clear to the customers: If the gas safety device supplier sells its product by way of interviewing the customers, in addition to that the provider shall comply with the duty of disclosure and rights to termination provided by Articles 18 and 19 of the Consumer Protection Law, a written contract shall be made to avoid any possible dispute. To avoid the consumer's failure to understand their rights or leading them to believe that such products are provided for free, the said written contract should include all rights and obligations, the name of the seller, the responsible person if the seller is a company and the address of the seller. As for the name of the buyer, telephone number, address and ID number, it would be better that they be filled out by the buyer . If such information is to be filled out by the sales person, it is important to make clear the contract terms to the buyer. If a gas safety device provider fails to comply with the above requirements, and any dispute arises therefrom, the consumer's statements would be given more weight unless there is a proof to rebut such argument. A dealer actually selling such product shall put its company name at an obvious place in the contract and shall not sell such product in the name of the manufacturer or supplier. Similarly, if the manufacturer or supplier does not prohibit the dealer from using their names when selling such products, the consumer may think the dealer's sales acts are authorized by the manufacturer or the supplier, and may even be under the mistaken impression that they actually are the same entity. In this regard, the dealer which actually undertakes the sales act shall honestly reveal its name, responsible person and business or residence address to the consumer. From the FTC's handling of the improper sales of the gas safety devices, it is found that the two main reasons which consumers do not have adequate sales information are the lack of gas safety knowledge, and misconceiving the product function. Therefore, when a gas safety device seller visits a customer for sale of the products, under the principle of good faith, the seller should reveal the product's function, special features and limitations. If the gas safety device seller fails to comply with the disclosure duty of required information to a serious extent, or it intentionally withholds important sales information, it is deemed to be a "deceptive act" in violation of Article 24 of the Fair Trade Law.
(4) The products name and advertisement: It is known that the public generally lacks gas safety knowledge and fears gas related accidents. In addition, the names of the gas safety devices vary and are unregulated. If the name and the advertisement of the products involve misrepresentation or misleading manifestation or expression so as to make the consumer misconceive its function, or the advertising description of the product exceeds the actual function of the product to the extent that would be unacceptable to an ordinary person , such acts are in violation of Article 21 of the Fair Trade Law.
Summarized by Huang, Ch'ung-chieh
Supervised by YU, Su-su
＊＊: For information of translation, click here
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