Feifan Marketing Enterprise

Case:

Key Words:

bank contracted marketing agency, interest rate, untrue advertisement, mortgage broker

Reference:

Fair Trade Commission Decision of August 10, 2006 (the 770th Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095124

Industry:

Other Consulting Services (7409)

Relevant Laws:

Article 21 of the Fair Trade Law

Summary:

1. This case originated from a letter forwarded by the Financial Supervisory Commission, Executive Yuan (hereinafter called "the FSC") on June 19, 2006. In the said letter, the FSC reported that since April 1, 2006, financial institutions could only commission marketing companies in which they have 100% of shares to engage in marketing operations of credit cards and consumer loans (including cash cards). However, in the advertisement of Feifan Convenient Loan, it was claimed that this company was a bank contracted marketing agent and was a convenience store of financial planning for more than 30 banks. Additionally, outsourced credit card marketing companies shall only engage in credit card marketing operations and accept the commission from only one card issuing institution. Moreover, Feifan Convenient Loan was neither a mortgage marketing agent outsourced by a bank nor a settlement agent as announced by the Bankers Association of the Republic of China (hereinafter called the "Bankers Association"); therefore, the aforesaid advertisement might be untrue. Furthermore, contents such as " consolidated mortgage interest rate starting from 1.68%" were found in the copy of the said advertisement, which are identical to the violation type of representations regarding "low interest rates" made by mortgage brokers and punished by the Fair Trade Commission ("FTC").

2. Regarding the statements of being a bank contracted marketing agent and a convenience store of financial planning for more than 30 banks, the FTC requested Feifan Marketing Enterprise (hereinafter called "Feifan") in writing for an explanation. Feifan admitted that the aforementioned statements were merely employed as a marketing method. In fact, Feifan had not entered into any contract with any bank. Therefore, it is obvious that the advertisement in question is a false, untrue and misleading representation.

3. The FTC was informed by the Bankers Association that from April 2005 to March 2006, the most preferential mortgage interest rate was 1.68% (Union Bank of Taiwan). Said interest rate was only effective for the first 3 months. From the fourth month onwards, the interest rate would be changed to 3.99%, 5.99% or 11.99% based upon the selected plans. In other words, the aforesaid preferential mortgage interest rate was only good for the first 3 months and subject to change from the fourth month onwards based upon the types of plans. The new mortgage interest rates should be much higher than the preferential rate. However, Feifan's advertisement only mentioned "consolidated mortgage interest rate starting from 1.68%," instead of disclosing the term of the preferential rate in question. What was stated in the advertisement was obviously inconsistent with the actual practice by the banks. Mortgage terms are not all the same; some might even be longer than 1 year. Additionally, the interest rate might be much higher than the preferential rate. Interest rate is crucial for mortgage applicants to engage in mortgage trade and service. Feifan shall have the obligation to fully disclose the interest rate for mortgage applicants to select the plans that best suit their needs. Feifan failed to contain the term of the preferential rate and disclose the meaning of the " consolidated mortgage interest rate starting from 1.68%" or the interest rate applied during the non-preferential period. The advertisement left mortgage applicants with no sufficient information to confirm the mortgage details and might lead mortgage applicants into having mistaken cognition and making wrong decisions. Therefore, it is obvious that Feifan concealed important trading information in the representations of the advertisement in question and made such advertisement misleading.

4. During the FTC's 770th Commissioners' Meeting on August 10, 2006, the FTC determined that the aforesaid statements contained in Feifan's advertisement in question to be false, untrue and misleading representations regarding the contents and quality of the mortgage service, which violated Article 21(3) applied mutatis mutandis to Article 21(1) of the Fair Trade Law.

Appendix:
Feifan Marketing Enterprise's Uniform Invoice Number: 09604972

Summarized by Lai, Mei-Hua; Supervised by Shen, Li-Yu