Fast V International Co.

Case:

Key Words:

financial management and loans, no collateral needed, no guarantor needed

Reference:

Fair Trade Commission Decision of November 24, 2010 (the 994th Commission Meeting), Disposition Kung Ch'u Tzu No. 099130

Industry:

Other Financial Intermediation Not Elsewhere Classified (6499)

Relevant Laws:

Paragraph 3 of Article 21 of the Fair Trade Law mutatis mutandis application of Paragraph 1 of the same article

Summary:

1. Fast V International Co. (hereinafter referred to as Fast V Co.) posted in the financial management section on the front page of Yahoo! an advertisement claiming the company would "promptly approve loans from NT$200,000 up to NT$8,000,000." Clicking the ad would take the user to the "Home Loans" on the front page of the company's website, where the company claimed it would provide "Up to 100% home loans and financial management assistance at interest rates starting from 1.5% (the first six months.)" The FTC examined the content of the website and found, in addition to what had been reported by the informer, there were other ads, such as "Loans for business owners at interest rates starting from 1.88% (for the first six months) and no collateral or guarantor needed" and "Loans up to NT$2,000,000 to pay off your debts at annual interest rates starting from 1.88% (the first two months,)" that might be misleading. The FTC therefore combined them in the investigation to see if any illegal conduct was involved.
2. Grounds for disposition:
   A. Since the ad offering "Up to 100% home loans and financial management assistance" was placed on the home page, it gave the impression that home buyers could obtain as much as 100% of the worth of the homes they intended to purchase. Fast V Co. contested that the 100% loan offer had been based on the loan policies of Ta Chong Bank and Standard Chartered Bank. However, the latter clarified that it had never marketed any packages offering consumers loans up to 100% of the worth of the homes. Ta Chong acknowledged that it had once offered 100% net asset value (NAV) loans to homebuyers but the NAV of a home would have been the result of the bank's internal evaluation, not entirely the same as the "transaction price," the amount indicated in the transaction contract. Furthermore, the offer had been made for home purchases completed through real estate agencies directly managed by the top five realtors, namely Sinyi Realty, Yung Ching Realty, Pacific Rehouse, Rebar Rehouse, and HBhousing; plus the homes had to be located in the P or A District as defined by Ta Chong. However, in the said advertisement only "up to 100% home loans" was indicated, without giving the definition of the loan percentage or specifying the target objects of the special package, the collateral required, or the district in which the homes had to be located. The conduct was misleading and in violation of Paragraph 3 of Article 21 of the Fair Trade Law (FTL) and Paragraph 1 of the same article was applicable mutatis mutandis.
   B. Furthermore, the wording of "Loans for business owners at interest rates starting from 1.88% for the first six months and no collateral or guarantor needed" and "Loans up to NT$2,000,000 to pay off your debts at annual interest rates starting from 1.88% (the first two months)" gave the impression that people with their own businesses would need no collateral or guarantor when applying for loans and the interest rate could be as low as 1.88% for the first six months and those seeking loans to clear their debts could apply for loans to the maximum of NT$2,000,000 through the approach of "individual negotiation," "preliminary negotiation," or "debt consolidation" (under 'Debt Clearance' on the web page were the options of 'Individual Negotiation', 'Preliminary Negotiation', 'Debt Consolidation', and 'Debt/Credit Diagnosis') at interest rates as low as 1.88% for the first two months. Fast V Co. contested that the offer of "Loans for Business Owners" was based on Standard Chartered Bank's "Loan Me More" and "Outstanding Customer Index Credit Loan" packages whereas the "Debt Clearance" was based on the "Loan Me More" package. Standard Chartered Bank had indeed offered the 1.88$ special interest rate but the "Outstanding Customer Index Credit Loan" was available to natural persons only, while whether guarantors would be required for the "Loan Me More" package had to be decided on a case-by-case basis and this was rather different from the claim in the advertisement that "no collateral or guarantor needed for business owners seeking loans." The findings of the FTC's investigation also revealed that the options of "Individual Negotiation" and "Preliminary Negotiation" in the "Debt Clearance" advertisement were not at all the loaning conditions for "Loan Me More". There was no guarantee that preferential loan repayment terms could be obtained through "Individual Negotiation". The debtor had to prove able to repay the loan. As for "Preliminary Negotiation", it was a package to assist the debtor to negotiate with all the creditors to establish a scheme for consumer loan repayment. Both measures were different from "debt clearance" in nature and Fast V Co. was unable to provide successful loan acquisition examples to prove the aforesaid loaning conditions were real. Hence, the wording of "business owner loans with no need of collateral or guarantor" and "loans up to NT$2,000,000 for debt clearance" in the advertisements was false, untrue, and in violation of Paragraph 3 of Article 21 of the FTL and Paragraph 1 of the same article applied mutatis mutandis. The company was therefore imposed with an administrative fine of NT$100,000.

Appendix:
Fast V International Co.'s Uniform Invoice Number: 80474964

Summarized by: Chen, Jing- Chuan; Supervised by: Hsu, Hung-Jen