Da Tong Water Co., Ltd.

1298th Commissioners' Meeting (2016)

Case:

Da Tong Water violated the Fair Trade Law by adopting unlawful practices to market water purifier filters

Keyword(s):

Water purifier, filter, raffle activity

Fair Trade Commission Decision of September 21, 2016 (the 1298th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 105105

Industry:

Manufacture of Other Domestic Appliances (2859)

Relevant Law(s):

Article 25 of the Fair Trade Law

Summary:

1. The FTC Service Center received complaints from private citizens stating that Da Tong Water Co., Ltd. (hereinafter referred to as De Tong Water) continued to use deceptive practices to market water purifier filters after it had been sanctioned by the FTC earlier for engaging in deceptive and obviously unfair marketing practices in violation of Article 25 of the Fair Trade Law because it held raffle activities to acquire personal information of participants then lying about them having won prizes but concealing important transaction information to mislead consumers into purchasing water purifier filters. Therefore, the FTC initiated an ex officio investigation. The FTC later received more complaints that Da Tong Water had conducted raffle activities during the Agricultural Specialty Product Exhibition held both at the Chinese New Year product market in the Cultural China Community in New Taipei City (hereinafter referred to as the �ultural China Specialty Exhibition) and the 2016 Taiwan Lantern Festival Show organized by the Taoyuan City Government (hereinafter referred to as the �aiwan Lantern Festival Show��), and then called prize winners to be ready to have their water purifiers installed at home. Since the practices were similar, the FTC consolidated both cases for the purpose of investigation.
2. Findings of the FTC after investigation:
   At the request of the FTC, the Management Committee of Cultural China Building described how the raffle activity was conducted during the Cultural China Specialty Exhibition and the Taoyuan City Government also briefed the FTC on Da Tong Water� participation in the Taiwan Lantern Festival Show. Meanwhile, Da Tong Water was requested to give its statement at the FTC as well. Afterwards, the FTC interviewed some of the prize winners at the Cultural China Specialty Exhibition and the Taiwan Lantern Festival Show and found out that Da Tong Water was unable to produce the proof of inventories and winner lists for any items other than the water purifiers indicated in the posters and raffle tickets for the two aforementioned raffle activities. The prize winners all admitted that they would not have had water purifiers installed if they had not received the prize-winning notices.
3. Grounds for disposition:
   1. Earlier, Da Tong Water had already been sanctioned for engaging in deceptive and obviously unfair marketing practices in violation of Article 25 by holding raffle activities to acquire the personal information of participants then lying about them having won prizes but concealing important transaction information to mislead consumers into purchasing water purifier filters.
   2. The prizes listed on the posters for the Cultural China Specialty Exhibition included Tatung TVs, bicycles, small household appliances, etc. However, Da Tong Water was unable to produce the proof of inventories for the TVs and bicycles or the lists of winners of these items. Meanwhile, it was indicated on the tickets for the raffle activity held during the Taiwan Lantern Festival Show that ��3C household appliances to be given for free.�� However, the company could only produce an invoice for some cooking ware purchased before the activity. In other words, it was doubtful whether Da Tong Water had really conducted the raffle and gave 3C household appliances as prizes. In addition, the content of the phone calls made to notify prize winners could mislead people into believing the calls were associated with the raffle activity held during the Taiwan Lantern Festival Show. Most prize winners expressed they would not have had the purifiers installed had they not been notified. In addition, they mentioned that Da Tong Water exaggerated about the price of the water purifier which made them overestimate the value of the water purifier and then agree to purchase the filters.
   3. Da Tong Water participated in activities organized by government agencies or organizations to give the public the impression that the company had something to do with the government agency or the organization. Then, the company held raffles and notified the so-called winners to entice people who originally had no plan to make any transactions and took advantage of their mentality to be happy about being lucky as well as exaggerated the cost of the water purifier to make the prize winners think it was worthwhile to spend a relatively small amount of money to purchase the filters under information asymmetry. Therefore, the practices of Da Tong Water to hold raffle activities to market water purifier filters was deceptive and obviously unfair conduct able to affect trading order in violation of Article 25 of the Fair Trade Law. In addition, the company never stopped the unlawful act even after it was sanctioned by the FTC. Therefore, the FTC decided to cite the second section of Article 42 of the Fair Trade Law as the basis of ordering the company to immediately cease the unlawful act while imposed on Da Tong Water an administrative fine of NT$200,000.

Appendix:
Da Tong Water Co., Ltd.'s Uniform Invoice Number: 54048810

Summarized by:Ma, Ming-Ling; Supervised by: Wu, Lieh-Ling