CleanStation Technology Co., Ltd.

1400th Commissioners' Meeting (2018)

Case:

CleanStation violated the Fair Trade Law by posting false advertising to market the "CleanStation D91 double-function energy-saving dehumidifier"

Keyword(s):

False, misleading, false advertising

Reference:

Fair Trade Commission Decision of September 5, 2018 (the 1400th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 107072

Industry:

Retail Sale of Electrical Household Appliances in Specialized Stores (4741)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

1. When checking business activities online, the FTC found out that CleanStation Technology Co., Ltd. (hereinafter referred to as CleanStation Technology) marketed on its website (http://www.cleanstation.com.tw) the "CleanStation D91 double-function energy-saving dehumidifier (hereinafter referred to as the product in question)" by claiming the product in question had been awarded the "level-1 Energy Efficiency Label" and had been rated as achieving "level-1 Energy Efficiency." However, according to the information provided in the Energy Efficiency Rating and Labeling Management System of the Bureau of Energy of the Ministry of Economic Affairs, the efficiency of the product in question was rated level 2. False advertising was suspected.
2. Findings of the FTC after investigation:
   (1)CleanStation Technology expressed in its written statement and the explanation given at the FTC that the product in question had complied with the level-1 Energy Efficiency defined by the Bureau of Energy for dehumidifiers before January 1, 2018. After related regulations were amended, however, the company received a notice from the Bureau of Energy that the product in question was demoted from level 1 to level 2 because the product in question did not meet the new regulations regarding the energy efficiency of level-1 dehumidifiers. As a result of its own negligence, the company did not correct the advertisement on the company website.
   (2) According to the Bureau of Energy, the Ministry of Economic Affairs publicly announced on April 17, 2017 the amendment to the "Criteria of Acceptable Energy Consumption of Dehumidifiers and Energy Efficiency Rating Labeling, Methods and Inspections " and the amended version was to take effect on January 1, 2018. The FTC's investigation showed that the claim in the advertisement was indeed different from the information provided in the Energy Efficiency Rating and Labeling Management System. In other words, the company continued to proclaim the energy efficiency of the product in question according to the old rating criteria and label the product in question with the old rating label after January 12018. It was false advertising.
3. Grounds for disposition:
   (1)CleanStation Technology marketed on its website the "CleanStation D91 double-function energy-saving dehumidifier" and started on January 1, 2018 to post the claim that the product has been awarded the "level-1 Energy Efficiency Label" and rated as achieving "level-1 Energy Efficiency." It gave the impression that the product in question had level-1 energy efficiency at the time the advertisement was posted. That is, compared to dehumidifiers of other levels of energy efficiency; it should consume less energy and save more electricity and money. However, according to the Bureau of Energy, the energy efficiency of the product in question had been demoted to level 2 after the new rating standards took effect on January 1, 2018. Yet, the product in question was still advertised as having level-1 energy efficiency. Apparently, it was inconsistent with the reality. Even if the product in question had been rated as achieving level-1 energy efficiency, the energy efficiency became level 2 as a result of regulation amendment. After receiving the notice from the Bureau of Energy, CleanStation Technology had the responsibility to review the contents of its advertisement and assure the authenticity of the claim of energy efficiency of its product during the period when the advertisement was posted. The company could not shirk the responsibility by using negligence as an excuse. The claim of the product in question having been awarded the "level-1 Energy Efficiency Label" and rated as achieving "level-1 Energy Efficiency" posted on the company's website between January and April 2018 was sufficient to cause consumers to have wrong perceptions about the quality of the product in question or make wrong decisions. It was in violation of Paragraph 1 of Article 21 of the Fair Trade Law.
   (2) After assessing the motive behind the unlawful act of CleanStation Technology, the level of harm, the seriousness of violation, the scale of business of the company and the company's attitude after violation, 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