Pure Affluent LOHAS International Corporation

Case:

Key Words:

multilevel sales, change of product items, business inspection

Reference:

Fair Trade Commission Decision of December 19, 2012 (1102nd Commissioners' Meeting), Disposition Kung Ch'u Tzu No. 101182

Industry:

Direct Selling Establishments (4872)

Relevant Laws:

Articles 7 (1), 16 (1) and 22 (1) of the Supervisory Regulations Governing Multilevel Sales

Summary:

1. The FTC received complaints from private individuals claiming that Pure Affluent LOHAS International Corporation (hereinafter referred to as Pure Affluent) has conducted multilevel sales without registering with the competent authority, the FTC, and recruiting mostly university students, who were minors, without obtaining the consent from their parents. The informers thought that such conduct was in violation of the Fair Trade Law.
2. The FTC visited the main office of Pure Affluence for business inspection and found out that not only the company did not keep statutorily required documents in the office, the shower gel product indicated in the returned goods record and orders from participants was also an unregistered item since the company had only registered the fruit essence, collagen protein, active enzyme compound and active vegetal fiber enzyme compound products with the FTC. Apparently, the company had failed to file with the FTC the addition of the product. Moreover, the contracts signed with a number of minors did not have the written consent of their legal representatives.
3. Grounds for disposition:
   The findings of the business inspection showed that, except for the 4 products registered with the FTC, Pure Affluence also sold shower gel. Obviously, the company had failed to file its change of product items with the FTC in advance. This constituted the violation of Article 7 (1) of the Supervisory Regulations Governing Multilevel Sales. In addition, the failure to obtain the written consent of the legal representatives of minor participants was in violation of Article 16 (1) of the same law. Finally, the failure to keep statutorily required documents at its main office was in violation of Article 22 (1) of the same law. For the above violations, the FTC imposed an administrative fine of NT$500,000 on the company.

Appendix:
Pure Affluent LOHAS International Corporation's Uniform Invoice number: 53743993

Summarized by: Hsu, Chen; Supervised by: Lai, Mei-Hua