Shiyun Motor Co.

Case:

Shiyun Motor Co. violated the Fair Trade Law by posting a false and untrue advertisement for its used cars

Key Word(s):

Used car, false advertisement

Reference:

Fair Trade Commission Decision of June 25, 2014 (the 1181st Commissioners' Meeting); Disposition Kung Ch'u Tzu No.103075

Industry:

Retail Sale of Second-hand Goods in Specialized Stores (4853)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

1. The FTC received complaints that Shiyun Motor Co. (hereinafter referred to as the "Company") posted a false advertisement on 8891.com, a platform for selling used cars, in which the price quoted for a 2006 Proton Gen2 was not its actual price.
2. Findings of the FTC after investigation:
   

   The Company posted information and a photo of the used car on 8891.com, and specified "price: NT$100,000 " next to the photo without adding any further information or restrictions to the price. The Company posted on the website the transaction records of the 2006 Proton Gen2 as "sold" at the "price: NT$100,000." However, the Company told the FTC that the price on the website was only the down payment, and that the actual price was NT$300,000, which clearly inconsistent with the advertisement.

3. Grounds of disposition:
   

   (1)

   The advertisement in contention gave people the impression that the price of a 2006 Proton Gen2 was NT$100,000, and that the sale price was also NT$100,000. However, the Company indicated that the price on the website was only the down payment, and the actual price must be totaled with the loan amount specified at the bottom of the webpage "all prices must add an additional NT$200,000 loan paid in 20 installments with zero interest rate." Hence, the actual sale price was NT$300,000, and an additional discount was given when the transaction was made and the final price was NT$250,000. The price listed on the website and sale price were both inconsistent with the actual price and constituted false advertisement.

   (2)

   The Company argued that the prices on 8891.com were only the "sale price" and not the "actual price," the financing plan was specified on the webpage, and consumers could learn the actual price from the website or by calling any of the Company's sales representative, etc. However, the price listed on the webpage was an important piece of information that would definitely influence consumers' purchase decision. Furthermore, the sale price listed next to the picture of the product without any further information or restrictions generally referred to the final sale price. Hence, if the price listed on the website in this case was only the down payment, then the Company was obligated to make consumers fully aware of this fact. When examining the entire advertisement, the Company's webpage on 8891.com had scrolling text that reads "zero interest loans of NT$100,000 ~ 400,000 were available based on the type of car, actual price negotiated on site," and at the bottom of the webpage in smaller font reads "all prices must add an additional NT$200,000 loan paid in 20 installments with zero interest rate." The text was hard to be detected and could only be interpreted as the Company also provides preferential loans. In addition, it was hard to put together that the actual price was the sum of the sale price, which was only the down payment, and loan amount. Based on the above, the contents of the website were a misleading representation that created unfair competition with competitors on the used car market. The price listed by the Company was a false, untrue or misleading representation in violation of Article 21(1) of the Fair Trade Law, and the FTC therefore imposed an administrative fine of NT$200,000 in accordance with Article 41(1) of the same law.

Appendix:
Shiyun Motor Co.'s Uniform Invoice Number: 25243623

Summarized by Wang, Chun-Wen; Supervised by Lai, Mei-Hua