EasyCard Corp.

1268th Commissioners' Meeting (2016)

Case:

EasyCard Corp. violated the Fair Trade Law for false and untrue advertisements regarding pre-purchases of EasyCards

Keyword(s):

Information disclosure, false advertising, EasyCard, snap up

Reference:

Fair Trade Commission Decision of February 24, 2016 (the 1268th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 105014

Industry:

Other Financial Intermediation Not Elsewhere Classified (6499)

Relevant Law(s):

Article 21 of the Fair Trade Law

Summary:

1. On August 31, 2015, EasyCard Corporation Ltd. (hereinafter referred to as EasyCard Corp.) posted an advertisement on its website that 15,000 sets (30,000 pieces) of Hatano Yui EasyCards (hereinafter referred to as the product in question) would be available for the public to purchase over the phone starting at 00:00 September 1. On September 1, the company announced on its website that the products in question were sold out within four hours and 18 minutes. Later, however, the media reported that only 12,005 sets of the product in question were offered that day for consumers to place orders over the phone. EasyCard Corp. also admitted that the quantity released for public purchase was indeed different from the quantity it announced. Therefore, false advertising was suspected.

2. Findings of the FTC after investigation:

   (1)

   To sell the product in question, EasyCard Corp. posted on its website on August 31 that "15,000 sets of Hatano Yui Public Welfare EasyCards to be available for the public purchase over the phone starting at 00:00 September 1, 2015, each set including one devilish version and one angelic version…" When the activity ended on September 1, the company posted another announcement stating that "the Hatano Yui Public Welfare EasyCards were sold out at 04:18, Septmeber 1..."

   (2)

   The FTC's investigation indicated that 15,000 sets of the product in question had been printed and the former chairperson of EasyCard Corp. gave the instruction to offer 12,000 sets for the public to purchase over the phone and in the end 11,980 sets were sold to the general public over the phone. The remaining sets were reserved for purchases by EasyCard Corp. employees, as well as pre-orders or gifts from EasyCard Corp for public relations purposes. The EasyCard Employee Welfare Benefit Committee sent an email to every employee on September 1 to notify them that each person could buy two sets at the maximum and, as it turned out, 438 sets were sold to employees. The sets for buyers intending to use them for public relations purposes were offered to business partners and potential customers of EasyCard Corp and 1,597 sets were sold. Meanwhile, 205 sets were given by the company to enhance its public relations.

3. Grounds for disposition:

   (1)

   The advertisement deliver the public the impression that 30,000 cards (15,000 sets) had been printed and calling up to place an order was the only way for consumers to purchase the product in question. The overall content of the advertisement was understood by anyone with common sense as "these are the entire available product" and "they can only be acquired by placing orders over the phone" and all 15,000 sets of the product in question were offered for the public to purchase over the phone starting at 00:00, September 1. By 04:18 on September 1, the product in question were sold out and consumers had no way to purchase any of the product in question after that point of time.

   (2)

   However, the truth was only 12,000 sets were offered for the public to purchase by phone while the actual quantity sold over the phone was 11,980 sets. The remaining cards were either sold to EasyCard Corp. employees (438 sets) or to other parties buying them to use for public relations purposes (1,597 sets). Then there were also 205 sets given away as gifts by the EasyCard Corp. for its own public relations purposes. Being advertised as an activity for consumers to place orders for a limited quantity of the product in question over the phone, it drew people's interest. Consumers called in to place orders because they believed there were 15,000 sets available as announced by EasyCard Corp. Nevertheless, the truth is the company only offered 12,000 sets to be purchased over the phone. This means buyers had no idea that a certain proportion of the cards had been reserved for the employees of EasyCard Corp. and other parties purchasing to use them for public relations purposes. In other words, the public was misled and might have made the wrong decisions as a result. In addition, the whole practice also led the public to have the mistaken idea about exactly when the products in question were sold out. By not disclosing the actual quantity of the product in question to be made available, EasyCard Corp. had failed to fulfill the obligation and responsibility of an advertiser and the conduct was in violation of Article 21(1) of the Fair Trade Law.