Lintian International Communications Co., Ltd.

Case:

Key Words:

telephone marketing, monthly rate, restriction on contract termination, material transaction information

Reference:

Fair Trade Commission Decision of May 5, 2010 (the 965th Commissioners' Meeting); Disposition Kung Ch'u Tzu No.099055

Industry:

Telecommunications Businesses (6100)

Relevant Laws:

Article 24 of the Fair Trade Law

Summary:

1. Officers of the Consumer Protection Commission in several counties received complaints that Lintian International Communications Co. Ltd. (hereinafter referred to as Lintian Co.) used telephone marketing to promote sales of cell phones in combination with service subscription by claiming no contract was needed and there would be no monthly rates if the phone was not used. When consumers received their phone bills, they realized the allegation of Lintian Co. was false. The Consumer Protection Commission therefore held a meeting on October 2, 2009 to discuss the disputes. The National Communications Commission, FTC, Lintian Co., and Fareastone Telecommunications (hereinafter referred to as FET) were also invited to attend. Acting on the conclusion of the said meeting, the FTC initiated ex officio instigation into telephone marketing used by Lintian Co. to see if the conduct was in violation of Article 24 of the Fair Trade Law.
2. Findings of the FTC after investigation:
   1. In order to make transactions to improve sales performance and gain bonuses, the telephone marketing personnel of Lintian Co. alleged the cell phones and numbers were free. They purposely deceived the public that there would be no charges if the phones were not used or withheld important transaction information such as the need to pay the monthly rate or the restriction on contract termination. Consumers were coaxed into accepting the cell phones and SIM cards delivered to their doors, and then the administrative personnel of Lintian Co. would confirm the subscription over the telephone but still withholding from giving the consumers the details in relation to the special offers and the monthly rates. They did quickly give the names of the special offers such as "FET 3G Economy 598 Value-added I-mode 190", "FET 3G 365 Value-added I-mode 190", and so on. When consumers asked again about important transaction information such as the monthly rate, the salesperson would simply respond, "That's correct. The things you have received are free of charge," or would just repeat the names of the special offers once more without giving any further details. In addition, in order to get consumers' IDs, the marketing personnel claimed that the company needed to copy the IDs as evidence to prove they had given the cell phone and the number or to confirm that the salesperson did not engage in embezzlement. Yet, in fact, the IDs were required to process the subscription procedure and serve as the proof for the company to get commissions. The conduct was to reduce the suspicion of consumers so that the company could successfully complete the subscription procedure by deception and withholding important transaction information and thus obtain rewards. Consumers did not find out about the need to pay the monthly rate and the restriction on contract termination until they were notified the number was activated or received the phone bill.
   2. Lintian Co. admitted that some of its sales personnel did fail to give sufficient information about the special offers and even told the users over the telephone that there was no monthly rate and the phone and the number were absolutely free of charge. The administrative personnel also did not follow the confirmation procedure with the customers. The FTC's investigation showed that during the period of more than one year that Lintian Co. conducted cell phone sales through telephone marketing. At least 70 disputes had taken place. The FTC found it impossible that the conduct had been the personal behaviors of some of the employees and that Lintian Co. was not responsible for the impact on trading order.
3. Grounds for Disposition:
   Lintian Co. applied deception or withholding material transaction information such as the prices of telecommunications services, the restrictions on the use of the services, and etc. through telephone marketing to create transaction opportunities. At least 70 disputes had taken place and complaints had been filed with the competent authority in several counties and cities. This was not a single or non-recurring transaction dispute. There was the potential that the interests of more consumers could be jeopardized in the future. It was deception that could affect the trading order of the market of telecommunications services through telephone marketing. The FTC considered the conduct in violation of Article 24 of the Fair Trade Law and fined Lintian Co. 400 thousand NT dollars.

Summarized by: Chang, Hsin-Yi; Supervised by: Liou, Chi-Jung

Appendix:
Lintian International Communications Co., Ltd.'s Uniform Invoice Number: 27748607