Top Motors Co., Ltd.

1391st Commissioners' Meeting (2018)

Case:

Top Motors violated the Fair Trade Law for posting false advertisements to market used "2012 2.0L tiptronic transmission BMW 3-Series Sedan 328i" cars

Keyword(s):

Used car, original components, false advertising

Reference:

Fair Trade Commission Decision of July 4, 2018 (the 1391st Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 107046

Industry:

Retail Sale of Motor Vehicles in Specialized Stores (4841)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

1. The FTC received a complaint from a private citizen about Top Motors International Co., Ltd. (hereinafter referred to as Top Motors) posting an untruthful claim of the "seller guarantees all components are original" for several used "2012 2.0L tiptronic transmission BMW 3-Series Sedan 328i" cars the company was marketing on 8891 auto transaction website because the informer had acquired from TUV Rheinland Taiwan the inspection report for the car he purchased and the report indicated the trunk lid had been changed, the back bumper and reinforcement bar had been dismantled for reparation, and the rear end sheet metal had been replaced. The informer thought the claim made by top Motors was false and in violation of Article 21 of the Fair Trade Law.
2. Findings of the FTC after investigation:
   Between September 8 and November 7, 2017, Top Motors posted an advertisement to market several used "2012 2.0L tiptronic transmission BMW 3-Series Sedan 328i" cars and claimed the "seller guarantees all components are original." It gave the impression that all the components of the cars were original. The FTC sent a written request to Top Motors asking it to provide a written statement and to offer its explanation at the FTC. Top Motors was unable to present any inspection report to support the claim it made that all the components of the cars being original. The company admitted that the rear end sheet metal of the car the informer purchased had been hit and, therefore, the claim of every component being original was not true. It was a false and misleading representation with regard to the quality of the product that could affect transaction decision in violation of Paragraph 1 of Article 21 of the Fair Trade Law.
3. Grounds for disposition:
   (1)Top Motors posted the advertisement on the 8891 auto transaction website and had to pay the 8891 website for posting the advertisement for a certain period. Both sides would not share the profit of sales and transactions did not have to go through the 8891 auto transaction website. Top Motors was the party to be contacted by consumers and the company was responsible for issuance of invoices and maintenance and reparation if there was anything wrong with the vehicle. In other words, Top Motors was the trading counterpart as far as the consumers in this case were concerned.
   (2) The advertisement in question did not indicate the vehicle identification number of the car. It was registered in the backstage content management system of the 8891 auto transaction website. The products the advertisement was posted for were used "2012 2.0L tiptronic transmission BMW 3-Series Sedan 328i" cars all the components of which were supposed to be "original" and the car the informer purchased was the same model, a BMW 3-Series Sedan 328i, made in the same year, 2012, and the same color, white. The used car inspection report from TUV Rheinland Taiwan for the car the informer purchased indicated that the trunk lid had been changed, the back bumper and reinforcement bar had been dismantled for reparation, and the rear end sheet metal had been replaced. The aforesaid parts were obviously not original. Therefore, the advertisement was inconsistent with the reality. Top Motors contested that it carried several BMW 3-Series Sedan 328i cars and almost all of them had all the original components but was unable to provide evidences to prove the claim that the components of the BMW 3-Series Sedan 328i cars it was marketing were all "original." The company also could not produce any proof to support the claim that the "seller guarantees all the components are original." Obviously, it could cause consumers to have wrong perceptions and make wrong decisions. Hence, the FTC concluded the claim of Top Motors was a false and misleading representation in violation of Paragraph 1 of Article 21 of the Fair Trade Law.
   (3) After assessing the motive and purpose of Top Motors for engaging in the unlawful act, the illegitimate profit expected, the level of harm of the unlawful act caused to trading order, the duration of harm to trading order, the profit gained from the unlawful act, the business scale, management condition and market status of the company, whether the company had been corrected or warned by the central authority, the types, frequency and intervals of violation in the past, the level of remorse and cooperativeness during the investigation and other factors, the FTC cited the first section of Article 42 of the Fair Trade Law and imposed an administrative fine of NT$100,000 on the company.