Livi Life Business Co., Ltd.

1233rd Commissioners' Meeting (2015)

Case:

Livi Life violated the Multi-level Marketing Supervision Act for its multi-level marketing approaches

Keyword(s):

Consumption integration service, VIP consumption integration service package, Livi Life Regal service contract

Reference:

Fair Trade Commission Decision of June 24, 2015 (the 1233rd Commissioners’ Meeting), Disposition Kung Ch’u Tzu No. 104049

Industry:

Direct Selling Establishments (4872)

Relevant Law(s):

Paragraph 1 of Article 7 and Article 24 of the Multi-level Marketing Supervision Act and Article 21 of the same Act applicable mutatis mutandis

Summary:

1. Taipei City Office of Commerce transferred a case of refunding dispute regarding Livi Life Business Co., Ltd. (hereinafter referred to as Livi Life) to the FTC whereas the FTC had also received since May 2014 a number of legal attest letters from private citizens deciding to terminate “consumption integration service” and “VIP consumption integration service” contracts signed with Livi Life and also complaints from others about Livi Life refusing their requests for termination of their “VIP consumption integration service” contracts. The situations involved violation of the Multi-level Marketing Supervision Act.

2. Findings of the FTC after investigation:

   Beginning in April 2013, the sales system of Livi Life included issuance of rewards, commissions and other economic benefits such as lecture fees, counseling allowances, bonuses, etc. However, Livi Life did not file the system with the FTC until Jan. 28, 2015. Meanwhile, the company’s participants could purchase the “consumption integration service” or the “VIP consumption integration service” package to obtain the right to recommend others to purchase the “Livi Life Regal service” and earn referral fees as well as receive contract fulfillment and service bonuses. Nevertheless, the company did not file with the FTC before the implementation of the system. Although Livi Life ever registered its multi-level marketing operation with the FTC but the content of its registration did not include the system at issue. By changing its sales system without filing with the FTC in advance, Livi Life violated Paragraph 1 of Article 7 of the Multi-level Marketing Supervision Act.

3. Grounds for disposition:

   Livi Life registered the prices of the “consumption integration service” and the “VIP consumption integration service” respectively as NT$50,000 (or 60,000) and NT$500,000, to be paid in installments. Participants purchasing the service packages had to pay the down payment of NT$5,000 (or 6,000) or NT$50,000 separately when signing the contracts and then a certain amount each month or each year afterwards. However, as of Jan. 22, 2015, not one participant had paid any installment and Livi Life had never urged the participants to pay up the installments. In other words, the actual purchasing prices of the “consumption integration service” and the “VIP consumption service” must have been the NT$5,000 and NT$50,000 that the participants paid as down payments, yet Livi Life had set the prices as mentioned earlier in order to prevent participants from terminating the contracts and returning the products. The FTC received a number of legal attest letters from participants requesting for contract termination and refunding but Livi Life never take actions according to related regulations and processed such withdrawal and product return requests within 30 days after participants terminating their contracts. Such conduct was a violation of Article 24 of the Multi-level Marketing Supervision Act and Article 21 of the same act was applicable mutatis mutandis. Therefore, the FTC cited Paragraphs 1 and 2 of Article 32 and Article 34 of the Multi-level Marketing Supervision Act and imposed NT$100,000 on the company for its violation of Paragraph 1 of Article 7 of the Multi-level Marketing Supervision Act, and NT$2 million for its violation of Article 24. The fines totaled NT$2.1 million.

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