Core Pacific City Co., Ltd. violates the Fair Trade Law by its incomplete disclosure of information concerning the use of and restrictions on gift certificate redemption in a promotional campaign

Case:

Key Words:

material trading information, obviously unfair, gift certificates, gifts or prizes

Reference:

Fair Trade Commission Decision of March 25, 2004 (the 646th Commissioners’ Meeting); Disposition (93) Kung Ch’u Tzu No. 093033

Industry:

Department Stores (4751)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

The complainant participated in the “Buy NT$5,000, Get NT$500” (i.e. get an New Taiwan Dollars (NT$)500 Gift Certificate with every NT$5,000 Purchase) sales promotion held by Core Pacific City Co., Ltd. (hereinafter called “Core Pacific City”). Upon purchasing a total of over NT$5,000, the complainant redeemed an NT$500 gift certificate, only to find that the certificate was for one-time use within a short time period and at places other than gold and jewelry, food and beverage, and other specific boutiques. Because insufficient information had been given in the advertising, the complainant had to make enquiries at individual boutiques to determine where he would be able to use the gift certificate. The complainant therefore complained to the Fair Trade Commission (FTC) that Core Pacific City had violated the Fair Trade Law (FTL) by insufficiently disclosing the content of and limitations on the use of the gift certificates.
Findings of the FTC after investigation:
For various reasons including different cash register systems, pricing policies, or unwillingness to do so, some boutiques at Core Pacific City were reluctant to participate in the “Buy NT$5,000, get NT$500” sales promotion. Core Pacific City was still uncertain about the exact number of participating boutiques when the advertising materials were printed, so it merely stated that “the use, duration, and locations will be as specified on the gift certificates.” During the campaign, Core Pacific City informed consumers of the use, duration, and locations for redemption of the NT$500 gift certificates in the following ways: (1) asking boutique clerks to take the initiative in informing customers; (2) stationing several service personnel on each floor to explain the information; and (3) installing placards in front of the boutiques. Consumers could also inquire themselves at the individual boutiques.
Grounds for disposition:
1. Gifts or prizes giveaways held by enterprises for sales promotion purposes appeal strongly to consumers. The restrictions or other conditions imposed in such promotions such as the things on offer, duration, quantity, and method of the promotion are material trading information sufficient to affect customers' decisions whether to transact with the enterprise or not. If an enterprise fails to fully disclose material trading information, it is likely to be in violation of Article 24 of the FTL.
2. Core Pacific City mentioned in its advertising of the “Buy NT$5,000, Get NT$500” promotion that the relevant information was to be specified on the gift certificates. This meant that the information was not made known to consumers until they obtained a certificate upon purchasing a total of NT$5,000 or more. Information such as the duration and manner of use of gift certificates and restrictions thereupon are an important factor in customers' decisions whether to transact with an enterprise. In holding a promotional campaign to attract customers, Core Pacific City bore the obligation to fully disclose material trading information about the offer as a basis for customers to decide whether to transact with it or not. Also, its use of less-than-fully-disclosed information to attract customers to its premises for first- and second-time consumption constituted, in relation to its competitor department stores, an obviously unfair act sufficient to affect market trading order.
3. Although Core Pacific City found it difficult to fully disclose restrictions on gift certificate use when the advertisements were printed due to the reluctance of some boutiques to participate in the campaign, it nevertheless could have indicated such restrictions by making reference to the types of businesses, floors, number of boutiques, and so forth, to enable consumers to get some idea of the scope of products to be excluded. By the time Core Pacific City did disclose this material trading information at its sales premises and ask boutique clerks or service personnel on the various floors to provide explanations, the consumers or potential consumers had already been attracted to the department store by the advertisements. Its actions thus were inconsistent with competition ethics and is against efficient competition. The use of vague wording such as “designated boutiques” and “temporary boutiques” left consumers unable to determine the scope of the boutiques that would not accept the gift certificates. So, Core Pacific City could not be deemed to have fully disclosed material trading information.
4. Core Pacific City failed to fully disclose information relating to the use of and restrictions on its gift certificates in its advertising materials for the promotional campaign, thereby obviously taking advantage of its trading counterparts' inferior position in terms of access to information. These actions were obviously unfair acts sufficient to affect trading order under Article 24 of the FTL. Weighing the motive, purpose, and anticipated benefit of the unlawful acts, the degree and duration of harm to trading order, the benefits obtained, the business scale, operating condition, and market position of the enterprise, and its cooperativeness in the investigation, this Commission ordered the respondent to immediately cease the violation in accordance with the forepart of Article 41 of the FTL.

Appendix:
Core Pacific City Co., Ltd.’s Uniform Invoice Number: 97170634

Summarized by Yang Chung Lin; Supervised by Chen Yuhn-Shan

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