Ladder Digital Education Corp.

Case:

Key Words:

withdraw from the sales and returning of goods, bank loan, installment

Reference:

Fair Trade Commission Decision of April 19, 2007 (the 806th Commissioners' Meeting); Disposition (96) Kung Ch'u Tzu No. 096078

Industry:

Direct Selling Establishments (4872)

Relevant Law:

Article 23-3(2) of the Fair Trade Law

Summary:

1. This case originated from complaints submitted by the general public to the FTC stating that: Ladder Digital Education Corp. (hereinafter called "Ladder Corporation") re-delayed handling the termination of contracts and the returning of goods. Additionally, after the corporation terminated the contracts and performed the returning of goods, it had not performed its obligation on paying off the participants’ bank loans – this incident resulted that the participants still received the notification sent by the banks to urge the payment of overdue bank loans from the participants. Therefore, the corporation had not handled the withdrawal from the sales and returning of goods in terms of the law.
2. Findings of FTC after investigation:
   1. It was found that the complaint concerned applied to Ladder Corporation for the returning of goods online on December 6, 2006 and he held the application form as a proof. Ladder Corporation informed the participant of the charges particulars on January 16 and 17, 2007 and the completion for return goods on January 17, 2007, and upon the agreement, Ladder Corporation would refund the participant by check.
   2. It was again found that the Corporation had not returned to the participants the amount of money that bought back the supply of service or fulfilled its promise on paying off the participants’ bank loans, after receiving goods possessed by a portion of the participants and necessary charges from the participants, and completing the relevant procedures for return goods. On the other hand, the Corporation paid off the loans for the participants by installment instead, and misled the participants to believe that the enterprise had completed handling the matters related to the withdrawal from the sales and returning of goods. Later, as Ladder Corporation was unable to continue to pay off the loans, the banks immediately urged the payment of overdue bank loans from the participants who believed to have already completed the procedures for return goods, and hence the participants’ credit statuses was affected.
3. Grounds for disposition:
   1. Article 23-2(2) of the Fair Trade Law provides that "[w] ithin thirty days from the termination of the agreement in accordance with the preceding paragraph, the multi-level sales enterprise shall buy back all goods possessed by the participant at ninety percent (90%) of the original purchase price; provided that it may be deducted the bonuses or remuneration paid to the participant for the purchase as well as the amount of the decreased value of the goods." Article 23-3(2) of the same law sets out that "[t]he provisions of the two preceding articles that relate to goods shall apply mutatis mutandis to the supply of services."
   2. The form which was printed after the complaint applied to Ladder Corporation for return goods online on December 6, 2006 and which showed that the application form was successfully sent, could be regarded as the evidence – a written notice from Ladder Corporation. The Corporation was late in informing the participant of the particulars for returning of goods as the participant only received the notice on January 16 or 17, 2007 – and hence the prescribed period, 30 days, set forth in the aforesaid provision, was expired. It therefore violated Articles 23-3(2) and 23-2(2) of the Fair Trade Law.
   3. Additionally, as Ladder Corporation required the participant to pay the usage charge and had not paid the participant the amount of money which bought back the service of supply after terminating the participation contract and handling the withdrawal from the sales and returning of goods, it would be difficult to find that Ladder Corporation had performed the obligation for buying back the supply of service held by the participant. In the same way, the Corporation disregarded that the participant’s did pay to the bank by installment for the usage of the service of supply, it charged the participant for the usage of the supply of service at the time of returning of goods. Without doubts, the Corporation indeed charged the participant extra fees. In addition, Ladder Corporation did not pay off the actual amount of the participant’s bank loan; on its initiative, it paid off the loans on behalf of the participant. These facts showed that the Corporation used the extra fees charged on the participant to pay off the participant’s bank loan. It would be even difficult to find that the Corporation had bought back the supply of service held by the participant and completed returning of goods pursuant to the law. It was obvious that Ladder Corporation did not buy back the returning goods and perform its claim on assisting the participant to clear his debt to the bank. The acts of the Corporation violated Articles 23-3(2) and 23-2(2) of the Fair Trade Law.
   4. After considering the motive, purpose and anticipated improper profits of the unlawful acts of Ladder Corporation;the degree and duration of the unlawful acts' harm to market order; the benefits derived on account of the unlawful acts; the scale, operating condition and market position of the enterprise; whether or not the types of unlawful acts involved in the violation have been corrected or warned by the Central Competent Authority; the types and numbers of and intervals between past violations, and the punishment for such violations; the remorse shown for the acts and attitude of cooperation in the investigation;and other factors,the FTC imposed an administrative fine of NT$5,000,000 on Ladder Corporation in accordance with the fore part of Article 41 of the Fair Trade Law.

Appendix
Ladder Digital Education Corp.'s Uniform Invoice Number:30924402

Summarized by Su,John;Supervised by Hsu, Hung-Jen