Taiwan Rakuten Ichiban Co., Ltd.

1299th Commissioners' Meeting (2016)

Case:

Taiwan Rakuten violated the Fair Trade Law by posting false advertising for "Lola Handmade Jams" on Yahoo! Kimo

Keyword(s):

Handmade jam, keyword search, false advertising
Reference:
Fair Trade Commission Decision of September 28, 2016 (the 1299th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 105103

Industry:

Retail Sale via Mail Order Houses or via Internet (4871)

Relevant Law(s):

Article 21(4) of the Fair Trade Law and Paragraph 1 applied mutatis mutandis

Summary:

  1. Taiwan Rakuten Ichiban Co., Ltd. (hereinafter referred to as Taiwan Rakuten) posted on the Yahoo! Kimo shopping website an advertisement for "Lola Handmade Jams" (hereinafter referred to as the advertisement in question) which included the wording of "lowest prices ever for the besting-selling Lola Handmade Jams; order online to enjoy the feedback!" When consumers clicked on the link to enter the "Foods and Sweets" webpage on Taiwan Rakuten website, however, there were no Lola Handmade Jams. A false advertising was therefore suspected.
  2. Grounds for disposition:
    1. Taiwan Rakuten financed the advertisement and www.Rakuten.com.tw, the URL of Taiwan Rakuten, was also indicated on the webpage. The company had the right to review, revise and post the advertisement in question. When Internet users clicked on the advertisement carrying the wording of "lowest prices ever for the besting-selling Lola Handmade Jams; order online to enjoy the feedback", they were redirected to the "Foods and Sweets" webpage on the Rakuten website maintained by Taiwan Rakuten. As a result, the number of clicks on the advertisement, the rate of exposure of the Taiwan Rakuten website, and the number of visits all increased and consequently business opportunities for the online shops on the "Foods and Sweets" webpage were created. For this reason, Taiwan Rakuten was considered the advertiser in this case.
    2. The characteristic of the advertisement in question was when an Internet user entered the keyword, the search engine would simultaneously display the advertisement associated with the keyword and the webpage found to attract the user to click on the link to connect to the webpage posted by the advertiser. In other words, Taiwan Rakuten posted the advertisement in question and defined the keyword for the search engine to show the search result so that Internet users were drawn to visit the webpage. As a result, the exposure rate of its website and the number of visits which meant business opportunities for the sellers thereon increase. That is to say that the content displayed after the keyword search was intended to attract trading counterparts, either specific or non-specific consumers, to make transactions. Hence, the authenticity of the content was subject to Article 21 of the Fair Trade Law when it was false or misleading.
    3. The FTC received a letter from Lola Life Enterprise Corporation. The enclosed notarization dated Jul. 31, 2015 stated that Taiwan Rakuten posted an advertisement for "Lola Handmade Jams" with the claim of "lowest prices ever for the besting-selling Lola Handmade Jams; order online to enjoy the feedback!" and this was enough to create in viewers the perception that Lola Handmade Jams were being promoted at low prices on the Rakuten website. Viewers would be attracted by the advertisement and click on the link to enter the "Foods and Sweets" of the website, but there would be no Lola Handmade Jams, not to mention the lowest prices ever.
    4. The FTC's investigation revealed that President Transnet Corporation (hereinafter referred to as President Transnet) had placed orders to purchase Lola Handmade Jams from Chili Enterprises and set up a virtual store on the Taiwan Rakuten website to market the products between 2009 and 2011. But the company has stopped the operation in 2011. However, Taiwan Rakuten continued to post the advertisement in question between Nov. 20, 2013 and Aug. 5, 2015. The advertisement made people believe that Lola Handmade Jams were still available at the lowest prices ever on the Rakuten website. The content was inconsistent with the reality and the difference exceeded what consumers could accept. Besides causing consumers to have wrong perceptions and decisions, it could also create unfair market competition situation for competitors who worked hard to win transaction opportunities. The conduct was a false and misleading representation with regard to service and could affect transaction decision. It was in violation of Paragraph 4 of Article 21 of the Fair Trade Law and Paragraph 1 of the same article was applicable mutatis mutandis. Therefore, the FTC imposed an administrative fine of NT$50,000 on Taiwan Rakuten.

Appendix:
Taiwan Rakuten Ichiban Co., Ltd.'s Uniform Invoice Number: 28847204

Summarized by:Tai, Yu-I; Supervised by: Tsao, Hui-Wen