Mr. Shieh

1293rd Commissioners' Meeting (2016)

Case:

Mr. Shieh violated the Fair Trade Law by posting false advertisements for the "Leyun Estate" villas

Keyword(s):

Countryside villa, farmhouse, the Regional Planning Act, false advertising
Reference:
Fair Trade Commission Decision of August 17, 2016 (the 1293rd Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 105094

Industry:

Real Estate Activities for Sale and Rental with Own or Leased Property (6811)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

  1. The FTC received complaints from consumers about a MR. Shieh posting in newspapers and on unju.com.tw advertisements for the countryside villas in the "Leyun Estate". In addition to the wording of "American-style countryside villas each on a 756-ping lot" and "each villa built on a flat lot of land measuring 756 ping and selling for NT$7.88 million and up," signs put up at the estate also indicated that "each wooden house on a 380-ping lot of land and selling for NT$3.8 million and up." The properties were being marketed as regular housing units, but the area where they were built was hillside land reserved for agricultural purposes. Therefore, false advertising was suspected.
  2. Findings of the FTC after investigation:
    The aforementioned advertisements in newspapers and unju.com.tw carried the wording of "American-style countryside villas each on a 756-ping lot" and "each villa built on a flat lot of land measuring 756 ping and selling for NT$7.88 million and up." The advertisements also showed pictures of the wooden houses. At the estate, there were signs indicating each wooden house was on a 380-ping lot of land and selling for NT$3.8 million and up," also showing pictures of wooden houses. Meanwhile, the website indicated in the news advertisements for the "Leyun Estate" included the wording of "American countryside villas each built with wood on a 756-ping lot of land and selling for NT$7.88 million and up," "community style," "with neighbors around," and "each one a dream house to be owned" while pictures of wooden houses and the kitchen, living room and bedrooms were also posted. The advertisements delivered the impression to the public that the wooden houses were in a community and the kitchen, living room and bedrooms in each unit had been designed and built according to law and there would be neighbors around. However, according to the Tainan City Government, the area where the units were constructed was hillside land reserved for agricultural purposes. As specified in Table 1 attached to Paragraph 3 of Article 6 of the Regulations on Non-urban Land Use Control enacted in accordance with Paragraph 1 of Article 15 of the Regional Planning Act, farmhouses could be built on land reserved for agricultural purposes (unless it is located in an industrial zone or a river area; collective farmhouses also may not be constructed in a specified agricultural area or forest area) under the condition that "the farmhouses are constructed with an approval obtained according to the Regulations Governing Building of Farmhouses on Agricultural Land or the Regulations Governing Construction in Areas under Regional Planning." However, no building license application for the wooden houses shown in the advertisements had ever been filed. In other words, the units had been built in violation of Article 25 of the Building Act and the city government had already made the decision to tear them down.
  3. Grounds for disposition:
    In general, the structures depicted in real estate advertisements and the usages of the land they are on can be an important factor in consumers�� decision on whether they would make purchases. Normally, the perception of consumers is that they can use the properties in accordance with the usages specified in such advertisements. In other words, if consumers have no way of knowing the usages described in the advertisements, the advertisements are actually in violation or related laws and regulations. Even if the object handed over by the advertiser is consistent with the content of the advertisements, there remains the risk that the buyer may be fined or the property may be torn down after the competent authority finds out that it is built illegally. When producing and posting the said advertisements, Mr. Shieh already knew he had not applied for permission to build the houses. However, he continued to market them by using the wording of "each an individual villa," "community style," "with neighbors around," and "a dream house to be owned," while showing pictures of the kitchen, living room and bedrooms to attract consumers. He never disclosed that the land the units were built on was a hillside area reserved for agricultural purposes and the use had to comply with the Regional Planning Act, the Agricultural Development Act, and the Regulations Governing Building of Farmhouses on Agricultural Land. Nor did he reveal that the applicants had to be farmers who had registered the land registration at least two years ago. The intention to mislead consumers was obvious and the conduct was likely to cause consumers to have erroneous perceptions or make wrong decisions. It was a false and misleading representation with regard to the content and use of the product and could also affect transaction decision. It was therefore in violation of Paragraph 1 of Article 21 of the Fair Trade Law.
  4. After assessing the motive and purpose of Mr. Shieh and the expected illegitimate profit form the unlawful act, the level and duration of harm incurred to trading order, the profit obtained therefrom, the scale of business, management condition and market status, whether the illegal conduct had been corrected or admonished by the central competent authority, the types, number of times and intervals of past violations and the penalties received, the level of remorse of the offender and the degree of cooperativeness throughout the investigation, and other factors, the FTC cited the first section of Article 41 of the Fair Trade Law and imposed NT$2 million on Mr. Shieh.

Summarized by: Chen, Jian-Yu; Supervised by: Chang, Chan-Chi