No disposition was made in the case of Chinatrust Commercial Bank was complained for inducing consumers with high-valued gifts to apply for the "TAIPEI 101 Luminous Co-Branded Card"

Case:

No disposition was made in the case of Chinatrust Commercial Bank was complained for inducing consumers with high-valued gifts to apply for the "TAIPEI 101 Luminous Co-Branded Card"

Key Words:

bank, credit card, Fair Trade Commission Guidelines on Cases Concerning Promotion by Means of Gifts and Prizes

Reference:

Fair Trade Commission Decision of May 13, 2004 (the 653th Commissioners' Meeting); Letter Kung Yi Tzu No. 0930003787

Industry:

Banks (6212)

Relevant Laws:

Article 19(iii) of the Fair Trade Law

1. In order to attract consumers to apply for the "TAIPEI 101 Luminous Co-Branded Card," Chinatrust Commercial Bank promised to give away the LANVIN Paris box (including a multipurpose leather handbook and a key chain, with a total market price of New Taiwan Dollars (NT$)10,080) for a single consumption of NT$888. Although in the market it is common for companies to give away gifts to attract consumers to apply for credit cards, such generous offer has never been seen before, which may cause unfair competition and be in violation of related provisions of the Fair Trade Law (FTL).
2. To regulate the conduct of giving gifts and prizes, the Fair Trade Commission (FTC) has established the Regulatory Principles for Cases Concerning Promotion by Means of Gifts and Prizes as a specific guideline for determining whether a business' conduct of giving gifts and prizes reaches the extent of inducement prescribed in Article 19(iii) of the FTL: where the value of the gift or prize given away is above a certain level (e.g., products priced over NT$100, and the value of the gift exceeds half of the value of the product; products priced less than NT$100, while the value of the gift exceeds NT$50), it constitutes a violation stated in Article 19(iii) of the Fair Trade Law. Although it is merely stated in the Principles that: gifts given away by businesses promoting "sale of products..." the businesses also give away gifts when promoting "provision of service." The trading value of services provided by businesses is difficult to measure in a specific amount of money (such as financial services like credit cards or credit granting). Therefore, if the value of the gift given away with such service cannot be determined whether it has exceeded the maximum limit prescribed in the Principles in a specific amount of money, then the contents or the effects of such gift shall be examined to see whether it has reached the extent of inducement as described above to determine whether there is possible violation of Article 19(iii) of the FTL.
3. Findings of the Fair Trade Commission (FTC) after investigation:Credit cards provide a convenient service allowing cardholders to make consumption before making any payment. Therefore, the trading value of such service seems difficult to be measured by credit limits or payable annual fees of the cardholders. It is also difficult to tell whether the gifts, such as gifts for card applications, gifts for card approvals, or premiums, exceed the maximum amount prescribed in the above Principles. Thus, we shall consider the contents or effects of such gifts to see whether the business employs customers' minds of aleatory or extravagant profits to affect them on making normal choices with profits, and induces the customers to trade with itself, in violation of Article 19(iii) of the FTL. In this case, Chinatrust Commercial Bank co-operating with TAIPEI 101 Mall to issue the "TAIPEI 101 Luminous Co-Branded Card" as an alliance between a credit card issue institution and a shopping mall. Those who applied for the "TAIPEI 101 Luminous Co-Branded Card" by December 31, 2003 and purchased over NT$888 in a single transaction at TAIPEI 101 Mall between November 14, 2003 and February 15, 2004 may receive a LANVIN Paris box, which is worth over NT$10,000. The purpose of the promotion was to attract consumers to apply for credit cards by way of giving away gifts, and in turn, to make purchases at the said shopping mall as a way to strive for more trading opportunities. However, in the event of the credit card market with intense competition, credit card issue institutions mostly employ the promotions of providing gifts or prizes as their major competitive means. Judging from the content of this activity, we find a triple limitation on the "time" (credit card application), the "location" (consumption) and the "minimum amount of consumption," which obviously shows that the activity is a short-term promotion to put the new product in a strong competitive position on the market; it is hard to jump to a quick conclusion that such conduct takes advantage of consumers' minds of aleatory or extravagant profits to affect them on their normal choices of goods or services in violation of Article 19(iii) of the FTL.

Summarized by Hung, Hsuan; Supervised by Horng, Der-Chang