Kung Yan Shih No. 40: Rights of participants in multi-level sales organizations to return goods and receive refunds
Case:
Kung Yan Shih No. 40: Rights of participants in multi-level sales organizations to return goods and receive refunds
Key Words:
multi-level sales organizations, refund period, right to return goods
Reference:
Fair Trade Commission Decision of September 16, 1992 (the 50th Commissioners' Meeting); (81) Kung Ts'an Tzu No. 3006
Relevant Laws:
Article 5 of the Supervisory Regulations Governing Multi-Level Sales
Summary:
1. Request for explanation: (1) Can participants return goods after they purchase goods from multi-level sales organizations? Can they obtain refunds? Are there any time limits? Are returnable goods limited to those still sealed in their original packaging? (2) If participants can return goods but the organization does not accept their requests to return goods, to which agency should participants direct their complaints? (3) How does one determine whether a multi-level sales organization is legal?
2. The Commission explained that: (1) Under Article 5 of the Supervisory Regulations Governing Multi-Level Sales, a participant has the right to notify a multi-level sales enterprise to rescind a contract or terminate a contract and to request return of the goods or a refund. Under the circumstances, the party that sold the goods is a multi-level sales organization while the other party was a participant in that multi-level sales organization. As a participant, this second party can request return of goods and a refund under Article 5 of the Supervisory Regulations Governing Multi-Level Sales. (2) Under Article 5 of the Supervisory Regulations Governing Multi-Level Sales, participants can notify a multi-level sales enterprise in writing to rescind a contract up to 14 days after concluding the contract. The sales organization shall accept the participant's application to return goods with 30 days of rescission and then refund all orders made by the participant as of the rescission and other fees paid by the participant when the participant joined the organization. Upon expiry of the rescission period, participants may also terminate the contract in writing and withdraw from the multi-level sales plan or organization at any time. Within 30 days of terminating the contract, the enterprise shall buy back goods possessed by the participant at 90 percent of the original purchase price paid by the participant. Individual multi-level sales organizations may make rules governing whether they will limit returnable goods to those still sealed in their original packaging so long as they do not violate the Article 5 of the Supervisory Regulations Governing Multi-Level Sales. When making such rules, the organization shall, depending on the nature of the product, consider the expiration dates of the goods, their salability, and the rules in the traditional sales market for return of similar goods. (3) If a multi-level sales organization fails to accept a participants' rescission or termination of a contract and does not accept returns, the participants may file a complaint with this Commission. If the Commission investigates and finds that the multi-level sales organization has indeed failed to return goods according to the regulation, the Commission will dispose accordingly. (4) To determine the legality of a multi-level sales organization, one should refer to the Fair Trade Law and the Supervisory Regulations Governing Multi-Level Sales. If the enterprise's structure and business practices conform to the aforementioned law and regulations, then it is a legal multi-level sales organization. Summarized by Kuo An Chi; Supervised by Lin Ching Tarng