FTC initialed an investigation, ex officio, regarding DOTCOM TECHNOLOGY CO., LTD’s untrue online advertisement, which might violate Article 21 of the Fair Trade Law

Chinese Taipei

Case:

FTC initialed an investigation, ex officio, regarding DOTCOM TECHNOLOGY CO., LTD’s untrue online advertisement, which might violate Article 21 of the Fair Trade Law

Key Words:

loan, false advertisement, interest rate

Reference:

Fair Trade Commission Decision of September 29, 2005 (the 725th Commissioners' Meeting); Disposition Kung Ch’u Tzu No. 094102

Industry:

Other Financing and Auxiliary Financing Not Elsewhere Classified (6299)

Relevant Laws:

Article 21-1 of the Fair Trade Law, applied mutatis mutandis to Article 21 (3) of the Fair Trade Law

Summary:

1. With the increment of loan advertisement, in order to prevent the said advertisement from affecting financial competition order and consumer’s rights and interests, the Fair Trade Commission (“FTC”) initiatively supervised mortgage companies’ online advertisement, ex officio. This case was regarding the following matters related to DOTCOM TECHNOLOGY CO., LTD’s (“DOTCOM”) online advertisement:
   • Representations of mortgage “interest rates” and “loan amount”;
   • Comparison of the mortgage company’s fiduciary loan program and other banks’ credit line programs and debit cards/credit cards;
   • Actual cases of approved loans; and
   • False representations of the mortgage company’s reputation and qualification.
2. Upon the investigation, the FTC found that:
   • DOTCOM claimed in its online advertisement that the mortgage interest rate of “Integrated Liability Loan starts from 1.48%” and that of “Individual Fiduciary Loan starts from 1.48%.” However, the most preferential mortgage interest rate of fifty-four banks, including Taiwan Bank, provided by the Bankers Association, was “1.68% first year” or “1.88% the first three months,” which were both with a term limitation and higher than the interest rate of 1.48% claimed by DOTCOM in its online advertisement And, it was also found that in the advertisement provided to Taipei First Credit Cooperative by DOTCOM, the mortgage program with an interest rate of 1.48 % was only for the first month of the loan; from the second month on, the interest rate shall become 1 (fixed index rate) + 10.45%. Obviously, DOTCOM did not disclose this important trading condition of the term (the first month of the loan) of such preferential interest rate in its advertisement in question.
   • In the advertisement in question, it listed three different mortgage types, such were “DOTCOM Program”, “Fiduciary Loan”, and “Debit Card/Credit Card.” On the premises of a loan amount of NT$1,000,000 and a term of seven years, such advertisement compared “DOTCOM Program 1.48% Interest Rate”, “General fiduciary Loan 12% Interest Rate” and “Debit Card/Credit Card 20% Interest Rate.” The total interest of DOTCOM Program’s seven-year mortgage was NT$53,351, which was NT$812,011 less than the interest of seven-year Debit Card mortgage, NT$865,362. DOTCOM admitted that the 1.48% interest rate was only for the first few months of the loan; however, the advertisement in question employed 1.48% to calculate the interest of the entire term of seven years. The aforementioned comparison is obviously inconsistent with the truth and should be a false and untrue representation.
   • The FTC found that the financial status of the applicants and loan approval results represented in the aforesaid advertisement do not match the actual conditions.
   • The aforesaid advertisement represented that “with a monthly salary of NT$ 20,000, the highest loan amount can be NT$2,000,000 and will be funded within 2 hours.” However, DOTCOM could not prove the authentication of the above representation.
3. To sum up, DOTCOM represented in its online advertisement that “Integrated Liability Loan – Interest Rate Starting From 1.48%,” “with a monthly salary of NT$ 20,000, the highest loan amount can be NT$2,000,000 and be funded within 2 hours,” “Loan Amount Less Than NT$ 300,000 can be funded within 2 hours,” and published a “Mortgage Programs Comparison” and mortgage cases. With regard to the aforesaid statements, DOTCOM made false, untrue and misleading representations regarding its mortgage services and quality. DOTCOM’s acts violated Article 21 (1) of the Fair Trade Law, applied mutates mutandis to Article 21 (3). Taking into consideration of DOTCOM’s motive and purpose in committing such unlawful acts, anticipated improper profits, the degree and duration of the acts’ harm to trading order, benefits derived from the unlawful acts, business scale, operating condition, market position, past violations, substantial evidence of remorse after being found in violation and the cooperativeness during the investigations, the FTC, in accordance with the forepart of Article 41 of the Fair Trade Law, ordered DOTCOM TECHNOLOGY CO., LTD to immediately cease the aforementioned unlawful acts and imposed an administrative fine of NT$ 2,000,000 on DOTCOM TECHNOLOGY CO., LTD.

Summarized By Ho, Yi-Hsuan;
Supervised By Wu, Lieh-Ling

Appendix: