Taipei Fubon Bank Co., Ltd. made false and misleading representation in its advertisement of New Taiwan Dollar certificate of deposit and published the said advertisement in the relevant newspaper and magazines, a violation of Article 21, Paragraph 1 of the Fair Trade Law applied mutatis mutandis to Paragraph 3

Chinese Taipei

Case:

Key Words:

Profit-doubling, more quotas for limited time, interest rate, advertisement

Reference:

Fair Trade Commission Decision of March 9, 2006 (the 748th Commissioners’ Meeting), Disposition (95) Kung Ch’u Tzu No. 095024

Industry:

Domestic Banks (6212)

Relevant Laws:

Article 21, , Paragraph 1 of the Fair Trade Law, applied mutatis mutandis to Paragraph 3

Summary:

1. This case originated from a complaint of the public, indicating that the complainant has read an advertisement of Taipei Fubon Bank Co., (hereinafter referred to as Taipei Fubon) in the Liberty Times on January 3, 2005 that printed as “Fubon Makes Highest Interest! Fubon’s Profit-Doubling Program”. Consequently, the complainant visited Taipei Fubon on January 6, 2005 to make an application for Fubon’s Profit Doubling Program A. The application was turned down because Taipei Fubon told the complainant that the NT$ 5 billion quota for Program A has been completely subscribed. However, the complainant read a report of the Economics Daily on January 12, 2005 that only NT$ 2.5 billion was subscribed for the said program. Then, the complainant told Taipei Fubon this report on January 13, 2005 and successfully subscribed for the Program A. In addition, after the quota of Fubon’s Profit-Doubling Program has been completely subscribed, Taipei Fubon still published the advertisement “Fubon Makes Highest Interest! Fubon’s Profit-Doubling Program” in Next Magazine, 190th issue (2005.1.13), Winwin Weekly, 421st issue (2005.1.17-1.23), Business Weekly, 895th issue (2005.1.17-1.23) and China Times Weekly, 1403rd issue (2005.1.11). Taipei Fubon may have engaged in an act of making false advertisement.
2. It is found that the Taipei Fubon’s “Fubon Makes Highest Interest! Fubon’s Profit-Doubling Program” advertisement has two versions, insert and full-page. The insert advertisement only stated “Fubon Makes Highest Interest! Fubon’s Profit-Doubling Program The Maximum Interest Rate For Certificate of Deposit is 4.6%” with the words “Taipei Fubon Bank”, the telephone number and website of the Bank included at the bottom of the insert. In addition to the messages in the insert, the phrases “profit-doubling, more quota for limited time, from January 5, 2005 (starting immediately) to the end of February, bring your money to Taipei Fubon to open a two-months New Taiwan Dollar certificate of deposits (NT$ 2 million or above), the interest rate quoted for your deposit doubles immediately (2.3%). For a new investment-oriented product, that is equivalent to US$ 30,000 or more, the annual interest will be increased to 4.6%. Letting your deposit creates double profit! Limited quota for this offer, please call immediately for more detail” were printed at the bottom of the full-page advertisement. Such advertisements gave the public an impression that the interest rate for any certificates of deposit of NT$ 2 million or more opened during the period of January 5, 2005 to the end of February, 2005 would be 2.3%. Or, the interest rate for certificate of deposit would go up to not more than 4.6% when the depositor bought investment-oriented product of US$ 30,000 or more. However, it is found that Taipei Fubon in practice has set up a NT$ 5 billion quota for the NT$ 2 million certificate of deposit program; no deposit will be accepted when the said quota has been subscribed. However, the application of purchasing investment-oriented products was accepted until February 28, 2005. Taipei Fubon Bank also admitted these practices. Next, the examination of financial institutions’ interest rates quotations for the period between January 5, 2005 and February 28, 2005 showed that the maximum fixed interest rate for three-month certificate of deposit was only around 1.265%. It is obvious that the 2.3% interest rate for certificate of deposit offered by Taipei Fubon was very attractive, and furthermore the said certificate of deposit program has NT$ 5 billion quota. Again, the investigation found that the certificate of deposit quota for doubling-profit program was completely subscribed within 9 days after its launching, which was from January 5, 2005 to January 13, 2005, a great discrepancy from the deadline of February 28, 2005 stated in the advertisement. Taipei Fubon did not disclose the important trading information in the advertisement that the program of 2.3% interest rate for certificate of deposit indeed has NT$ 5 billion quota, causing the potential trading counterparts to have wrong trading expectation. It is substantiate to conclude that the advertisement in this case has false and misleading representations.
3. Furthermore, the investigation found that after the quota of Fubon’s Profit-Doubling Program A has been completely subscribed on January 13 2005, Taipei Fubon still published the advertisement in this case in Next Magazine, 190th issue (2005.1.13), Winwin Weekly, 421st issue (2005.1.17-1.23), Business Weekly, 895th issue (2005.1.17-1.23) and China Times Weekly, 1403rd issue (2005.1.11). Taipei Fubon argued that, the Bank was unable to withdraw the said advertisement immediately because of the magazines’ circulation procedures. However, it is found that Taipei Fubon also did not announce that no more application would be accepted or take any remedial measures to let consumers know about the termination of the program after the quota of Fubon’s Profit-Doubling Program A has been completely subscribed. Taipei Fubon as the advertiser of advertisement at issue should be responsible for true representation in the said advertisement, and should not excuse itself by holding the consumers responsible for verifying the advertisement because of the advertisement’s circulation procedures. Therefore, it can be concluded from the available evidences that Taipei Fubon has made false and misleading representations when it continued to publish the advertisement of Fubon’s Profit-Doubling Program A in the aforementioned magazines after the quota for the said program has been completely subscribed.
4. The 748th Commissioners’ Meeting of the Fair Trade Commission decided that the aforementioned advertising act of Taipei Fubon has violated the provision of Article 21, Paragraph 1 of the Fair Trade Law, applied mutatis mutandis to Paragraph 3. Taking into consideration the motivation of the unlawful acts of Taipei Fubon; the degree of the act’s harm, circumstances of the unlawful act, scale of the enterprise; and attitude shown for the act, Taipei Fubon is ordered to cease the unlawful acts and a fine of NT$ 330,000 is imposed according to the anterior paragraph of Article 41 of the Fair Trade Law.

Summarized by: Yu, Wei-Jhen;
Supervised by: Wu, Lieh-Ling

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