AVerMedia Technologies Inc.

Case:

Key Words:

TV digital rod, aerial, remote control, gift and prize

Reference:

Fair Trade Commission Decision of May 25, 2011 (the 1020th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 100091

Industry:

Manufacture of Audio and Video Equipment (2730)

Relevant Laws:

Article 21 of the Fair Trade Law

Summary:

1. The FTC received from an informer a written complaint that AVerMedia Technologies Inc. (hereinafter referred to as AVerMedia Inc.) was marketing its remote-controlled HD digital rod MCE (Windows Media Center), model number A867R. The packaging indicated the product came with gifts (remote control and aerial) worthy of 1,198 NT dollars (the same unit applies hereinafter). The company also posted on page 70 of the June issue of e-Life Monthly an advertisement saying "Special Offer – HD digital rod A867R for 1,299 dollars only, with a free remote control, a high-quality MCE designated remote control with the market value of 799 dollars." Another advertisement could be found on its promotion posters saying that "extra freebies of a 2-pole high-sensitivity aerial worthy of 399 dollars and a designated remote control for Windows Media Center at the market value of 799 dollar." The gift-giving wording in the said advertisements by AVerMedia Inc. was in violation of the Fair Trade Law (FTL).
2. Findings of the FTC after investigation :
   (1)TV digital rods need to be connected to an aerial and scan the channels before they can receive the radio digital TV signals. Therefore, an aerial is a required accessory that comes with a TV digital rod. A remote control allows control from a distance. Although it is not a required accessory, most consumers use one. Consequently, today most TV digital rods come with a remote control and an aerial. Remote controls can be purchased separately but only by people whose remote control has been damaged or lost. In addition, each TV digital rod manufacturer provides aerials and remote controls that are used for their own products only. There is no compatibility between different brands.
   (2)The investigation showed that all TV digital rods available on the market carry on their packaging the indication that the remote control and the aerial are part of the content of the product and not gifts. AVerMedia Inc. was the only company that indicated on the packaging of its products that the remote control and the aerial were gifts.
3. Grounds for disposition:
   (1)The investigation showed that AVerMedia Inc. did indicate on its product packaging and posters and in June issue of e-Life Monthly the remote control and the aerial were gifts. However, since an aerial is a required accessory for a TV digital rod to receive radio signals and a remote control is an important accessory to facilitate consumers' control and operation from a distance, TV digital rods normally come with an aerial. Furthermore, all the businesses investigated, with the exception of AVerMedia Inc., indicated on the packaging of their products that the remote control and the aerial were part of the product content instead of indicating them as gifts. As an aerial is a required accessory and a remote control is an important accessory for the TV digital rod to have its basic functions, it is a general practice that they are included as part of the merchandise. The offender's use of the wording of "gift value" and "additional gif" was inconsistent with the normal practice of sales of this type of products. The intention was obviously to employ the misleading representation to increase the opportunity to attract potential trading counterparts.
   (2)The indication of gift giving by AVerMedia Inc. was strong enough to mislead consumers into believing that there was a rather large discount on the said product and buying it. Furthermore, AVerMedia Inc. only put one set of aerial and remote control in each package for the said product to have its functions. There was not an extra aerial or remote control. Therefore, the wording of "gift", "additional gift", and "give away" was a misleading representation with regard to content and price of product in violation of Article 21 (1) of the FTL. Applying the first section of Article 41 of the same law, the FTC ordered the company to immediately cease the unlawful act and also imposed on it an administrative fine of 100,000 dollars.

Appendix:
AVerMedia Technologies Inc.'s Uniform Invoice Number: 23611974

Summarized by: Liao, Wan-Ting; Supervised by: Wu, Lieh-Ling