Shenton Marketing Incorporation

Case:

Key Words:

multi-level sales, service fee, financial statement

Reference:

Fair Trade Commission Decision of January 25, 2007 (the 794th Commissioners' Meeting); Disposition (96) Kung Ch'u Tzu No. 096018

Industry:

Direct Selling Establishments (4872)

Relevant Laws:

Article 23-2 and 23-4 of the Fair Trade Law

Summary:

1. The complainant filed the copy of an attest letter stating that he joined Shenton Marketing Incorporation (hereinafter called "Shenton") in 2005 requested for withdrawal and refund after receiving the goods that were not conforming to the original agreement and contained defects.?? However, Shenton deducted unreasonable fees from the refund, in possible violation of the Fair Trade Law.
2. After the operation inspection completed by the FTC personnel at Shenton's major places of business, it was found that Shenton failed to prepare and keep in its main office the audited financial statements for the previous accounting year certified by a Certified Public Accountant. In addition, Shenton listed an unlawful item, "refund service fee," as one of the deductions from the refund in cases where participants withdraw from the organization and request for refunds.
3. Grounds for disposition:
1. It was found that Shenton violated Article 23-2(2) of the Fair Trade Law by unlawfully deducting "refund service fee" from the refunds when participants withdrew from the organization and requested for refunds upon termination of the contract.
2. Shenton also submitted a letter stating that it did not have the financial statements certified by a CPA due to the low sales amount earned in 2005. The letter proved Shenton's violation of Article 15(1) of the Supervisory Regulations Governing Multi-Level Sales by failing to prepare at its main office financial statements certified by a Certified Public Accountant.
3. After considering the motive, purpose and anticipated improper profits of the unlawful acts of Shenton; 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 type of unlawful acts involved in the violation have been corrected or appropriate warnings have been given 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, in accordance with Article 42(2) and (3) and the fore part of Article 41 of the Fair Trade Law, imposed an administrative fine of NT$230,000.

Appendix:
Shenton Marketing Incorporation's Uniform Invoice Number: 80164779

Summarized by Hsu, Chen; Supervised by Hsu, Hung-Jen