Chunghwa United Telecom Co., Ltd.

774th Commissioners' Meeting (2006)

Case:

Chunghwa United Telecom Co., Ltd. was complained for violating the Fair Trade Law by engaging in unlawful multi-level sales

Key Words:

multi-level sales, refund process, credit card service fee

Reference:

Fair Trade Commission Decision of September 7, 2006 (the 774th Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095134

Industry:

Direct Sales (4812)

Relevant Laws:

Article 23-3(2) applied mutatis mutandis to Article 23-1(2) and Article 23-2(2) of the Fair Trade Law

Summary:
  1. The Fair Trade Commission (“FTC”) was informed by two of the participants of Chunghwa United Telecom Co., Ltd. (hereinafter called “Chunghwa United”) that Chunghwa United failed to make any response after said two participants mailed a cease-and-desist letter to inform said company of contract termination and request for refunds in December 2005. After these two participants initiatively made contact with Chunghwa United, they were informed that they could apply for withdrawal and refunds with Chunghwa United's place of business in Taipei. However, these participants were rejected by said Taipei office.
  2. It was also found by the FTC at Chunghwa United's main place of business that Chunghwa United deducted a credit card service fee of various amounts from the refunds applied by the participants who requested to rescind or terminate the contract with Chunghwa Untied.
  3. Grounds for disposition:
    1. Pursuant to the relevant provisions set forth in the Fair Trade Law regarding a multi-level sales participant's withdrawal and refund right after the contract is terminated, a multi-level sales enterprise shall buy back the goods or services possessed by the participant and handle relevant refund affairs within thirty (30) days after the effective date of the contract termination. Chunghwa United claimed that one of the complainants failed to apply for the refunds before the deadline and refused his/her request. However, Chunghwa Unite did not accept the other complainant's refund application on the spot as well, and the thirty-day threshold as mentioned above has already lapsed.
    2. Furthermore, pursuant to the provisions of the Fair Trade Law regarding payments returned to participants who withdraw or return the goods to a multi-level sales enterprise, the multi-level sales enterprise may only deduct “any bonus or remuneration already paid to the participant for purchase of such goods,” “the value decreased due to the damage or loss attributable to the participant,” and “the shipping costs required for such collection, if the returned goods are collected by the enterprise.” Credit card service fee, however, is not provided in the law.
  4. Taking into consideration the motivation, purpose, and expected improper benefit of the unlawful acts of Chunghwa United; the degree and duration of the acts' harm to trading order; benefits derived on account of the unlawful act; scale of the enterprise; and remorse shown for the acts and attitude of cooperation in the investigation, the FTC imposed an administrative fine of NT$510,000 in accordance with Article 42(2) of the Fair Trade Law.

Appendix:
Chunghwa United Telecom Co., Ltd.'s Uniform Invoice Number: 12724254

Summarized by Li, Shih-Che; Supervised by Hsu, Hung-Jen

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