Dai Dai Money-earning Team

Case:

Key Words:

multilevel sales, prearranged funeral contract

Reference:

Fair Trade Commission Decision of June 20, 2012 (at the 1076th Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 101005

Industry:

Direct Selling Establishments (4872)

Relevant Laws:

Article 23-4 of the Fair Trade Law; Paragraph 2 of Article 11 of the Supervisory Regulations governing Multilevel Sales

Summary:

1. The FTC received complaints from participants who joined the multilevel sales organization of "Dai Dai Money-earning Team"and discovered the success stories, testimonies, and the domain name business involved were exaggerated or false and in violation of the Fair Trade Law.
2. Grounds for disposition:
   The FTC's investigation revealed that the URL of GDI was www.website.ws. "ws"is the domain name for the western Samoa Islands. The front page indicated the company name as Global Domain International Inc. and a Californian address was listed. The company never applied for recognition or permission to set up a branch office in Taiwan but the business plan and organization of the company showed that it was without doubt a multilevel sales operation as described in Article 8 of the Fair Trade Law. Further findings disclosed that participant enrollment and all transactions and payments were all carried out online. The products of GDI were supposed to be cyber services. There was no regulation that members had to give their real names and the company never checked the authenticity of the personal information members provided. In other words, the upline of Taiwanese members could a foreigner while the upline of this foreigner could be a Taiwanese. It was difficult to establish a full picture of the upline and downline structure of GDI. If Mr. A, the manager of "Dai Dai Money-earning Team", was a participant, his upline Yao Hsi Tung had at least four uplines above him. The existing evidence could not prove Mr. A was the first Taiwan national to introduce GDI's multilevel sales scheme or organization into the country and start the business defined as a multilevel sales operation in Article 8 of the Fair Trade Law. However, since Mr. A was a participant of GDI and the two websites (http://www.gdi-daidai.ws and http://www.stock168.ws) he had set up to recruit downline participants to join "Dai Dai Money-earning Team", both he and the operation had to abide by the related regulations in the Fair Trade Law.
3. Mr. A set up the two "Dai Dai Money-earning Team"websites where he posted an advertisement to promote and market GDI's ".ws"domain name business and cyberspace and recruit downline participants. To become a GDI member, people had to click on the advertisement on the web page to sign up and the server would automatically register the advertiser as their upline. In other words, when people clicked on the advertisement on the web page, they would be automatically connected to the GDI website to complete the signup procedure and become Mr. A's downline participants. Hence, the information provided on the two websites was the information regarding GDI's multilevel sales system Mr. A's provided for his potential downlines.
4. Under the heading of "Success Stories"on the "Dai Dai Money-earning Team"websites were testimonies such as "I'm fortunate to have found out about GDI…and I was able to achieve the goal of becoming a ‘president' so quickly,""After working with GDI for three months, I became a "leader,""Wow, Xiao-zhen (transliteration) has been promoted to be a "leader"in GDI,"etc. The overall impression these testimonies gave was there were positions of various levels like "president,""leader,""assistance general manager,"and "business representative."However, The FTC's investigation showed that there were no such positions in GDI. Mr. A admitted that he had made up all these titles. Therefore, the information Mr. A had provided on the "Dai Dai Money-earning Team"websites to recruit his downlines was apparently a false, untrue, and misleading representation with regard to the multilevel sales system of GDI.
5. After assessing the motive of Mr. A.s illegal conduct, the FTC acted according to the first section of Paragraph 1 of Article 41 and Paragraph 2 of Article 42 and imposed on Mr. A an administrative fine of NT$50,000 for his violation of Paragraph 2, Article 11 of the Supervisory Regulations Governing Multilevel Sales enacted in accordance with Article 23-4 of the Fair Trade Law. The FTC also ordered him to cease the unlawful act.

Summarized by Huang, Li-Ming; Supervised by Lai, Mei-Hua