Pa Star Technology Co.

1163rd Commissioners' Meeting (2014)

Case:

Pa Star Technology Co. violated the Fair Trade Law by posting false advertisements for ZANWA refrigerators on several shopping websites

Key Word(s):

False advertisement, online shopping mall, auction, environmental product, number one brand

Reference:

Fair Trade Commission Decision of February 19, 2014 (the 1163rd Commissioners' Meeting); Disposition Kung Ch'u Tzu No.103018

Industry:

Other Retail Sale in Non-specialized Stores (4719)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

The FTC received complaints from individuals that Pa Star Technology Co. (hereinafter referred to as "Pa Star") posted false advertisements on various websites (14 websites in total including GOHAPPY, MOMO, PChome shop street, PChome online shopping, Ruten, PostMall, TreeMall, Udn shopping, Yahoo online shopping mall, Yahoo shopping center, books.com, U-mall, web66.com, and Korlea) and claimed that its ZANWA refrigerators were "applauded by international environmental protection organizations as a double green eco-friendly product," "the number one eco-friendly and energy-saving brand," and given the " Taiwan Excellent Manufacturer Award."

Findings of the FTC after investigation:

The FTC requested explanations from Pa Star, the above shopping websites and auction websites, and various sellers regarding who was the supplier of the product at issue, who were involved in the advertisement designers, whether or not the advertisement in this case was examined, who decided the terms and conditions of the transactions, and profit distribution. A number of shopping websites (including GOHAPPY, MOMO, PChome online shopping, TreeMall, Udn shopping, Yahoo shopping center, books.com, and U-mall) indicated that Pa Star was not only responsible for supplying the products, but also for the designing and uploading the advertisement. The aforementioned advertisement and products were provided by Pa Star after it signed agreements with the website operators, and Pa Star shares profits from the sales of the product with the website operators. The remaining websites, including PostMall, PChome shop street, Ruten, web88.com, and Yahoo online shopping mall, stated that what they did was merely the provision of their platforms for Pa Star to post its advertisement, increase its sales opportunities, and receive the profits from the sales. The remaining websites did not take part in designing the advertisement and do not share the profit from sales of the product.

Grounds of disposition:

(1) The advertisement in this case was prepared and provided by Pa Star, while the Korlea webpage was directly operated by Pa Star. The wording that ZANWA refrigerators were "applauded by international environmental protection organizations as a double green eco-friendly product" in the advertisement was quoted from a news report of Chinese media, but the factory in the report was not the factory Pa Star commissioned in China to manufacture the product at issue. Concerning the words "given the Taiwan Excellent Manufacturer Award," Pa Star did indeed receive the award in May 2011, but its products selected for the award did not include the product in question. Moreover, the product in question was imported from China starting in May 2013 and therefore has no relation to the award received in 2011 at all. As for the wording "the number one eco-friendly and energy-saving brand," Pa Star was unable to provide any evidence to prove that the content is true. Based upon the above evidences, there was no question that Pa Star violated Article 21(1) of the Fair Trade Law by posting false advertisement on various websites.

(2) The abovementioned shopping websites (8 websites including GOHAPPY) were all operated under the company name, traded with customers and directly gained profits from sales, and are thus liable for the violation of Article 21 of the Fair Trade Law. However, considering that the advertisements posted on their websites were provided by Pa Star, the websites merely provided their platforms for the product suppliers to sell their products according to their agreements, as well as the advertisement designer was Pa Star, they cannot be held accountable for the false advertisement and the FTC did not impose any penalty on them. However, the FTC did send a warning letter urging the websites to pay attention to the correctness of information when using other sources for their advertisements. As for the remaining auction websites and sellers (5 sites including PostMall), the evidences showed that they merely provided their platforms for Pa Star to post the advertisement, they did not take part in designing the advertisement and did not share profits from the sales, and were therefore not responsible for the advertisement in question.

(3) After considering Pa Star's motive, severity of violation, scale of business, and past violations, the FTC imposed an administrative penalty of NT$300,000 in accordance with the first section of Article 41(1) of the Fair Trade Law.

Appendix:
Pa Star Technology Co., Ltd.'s Uniform Invoice Number: 13171842

Summarized by Lin, Yu-Ching; Supervised by Lai, Mei-Hua

! : For information of translation, click here

(1)	The advertisement in this case was prepared and provided by Pa Star, while the Korlea webpage was directly operated by Pa Star. The wording that ZANWA refrigerators were "applauded by international environmental protection organizations as a double green eco-friendly product" in the advertisement was quoted from a news report of Chinese media, but the factory in the report was not the factory Pa Star commissioned in China to manufacture the product at issue. Concerning the words "given the Taiwan Excellent Manufacturer Award," Pa Star did indeed receive the award in May 2011, but its products selected for the award did not include the product in question. Moreover, the product in question was imported from China starting in May 2013 and therefore has no relation to the award received in 2011 at all. As for the wording "the number one eco-friendly and energy-saving brand," Pa Star was unable to provide any evidence to prove that the content is true. Based upon the above evidences, there was no question that Pa Star violated Article 21(1) of the Fair Trade Law by posting false advertisement on various websites.
(2)	The abovementioned shopping websites (8 websites including GOHAPPY) were all operated under the company name, traded with customers and directly gained profits from sales, and are thus liable for the violation of Article 21 of the Fair Trade Law. However, considering that the advertisements posted on their websites were provided by Pa Star, the websites merely provided their platforms for the product suppliers to sell their products according to their agreements, as well as the advertisement designer was Pa Star, they cannot be held accountable for the false advertisement and the FTC did not impose any penalty on them. However, the FTC did send a warning letter urging the websites to pay attention to the correctness of information when using other sources for their advertisements. As for the remaining auction websites and sellers (5 sites including PostMall), the evidences showed that they merely provided their platforms for Pa Star to post the advertisement, they did not take part in designing the advertisement and did not share profits from the sales, and were therefore not responsible for the advertisement in question.
(3)	After considering Pa Star's motive, severity of violation, scale of business, and past violations, the FTC imposed an administrative penalty of NT$300,000 in accordance with the first section of Article 41(1) of the Fair Trade Law.