Quatek Co., Ltd. and Long Yih Industrial Co., Ltd.

772nd Commissioners' Meeting (2006)

Case:

The advertisement of “Korea Sanitizing/Fruits & Vegetables Purifying Cabinet” published on Kof World's website violated the Fair Trade Law by containing exaggerated and untrue statements

Key Words:

untrue advertisement, shopping website, fruits and vegetables purifying cabinet

Reference:

Fair Trade Commission Decision of August 24, 2006 (the 772nd Commissioners' Meeting); Disposition (95) Kung Ch'u Tzu No. 095130

Industry:

Retail Sale of Electrical Household Appliance in Specialized Stores (4641)

Relevant Laws:

Article 21(1) of the Fair Trade Law

Summary:

1. This case originated from a letter forwarded by the Department of Health on September 19, 2005. The Department of Health implemented the “2005 Supervisory Program of Unlawful Medical, Drug, Cosmetics and Food Advertisement” and found that: Quatek Co., Ltd. (hereinafter called “Quatek”) published an advertisement regarding its “Korea Sanitizing/Fruits & Vegetables Purifying Cabinet” on Kof World's shopping website. The advertisement in question was in regards to a general product. However, the statements of the said advertisement “mentioning fast dissolvent of utensils and sanitization, and six functions including 1.Get Detergent residues off the utensils; 2.Preserving & Fresh-Keeping; 3. Skin-Protecting and Beauty-Treatment; 4 Disinfecting Bacterium; 5.Purifying Drinking Water; and 6. Purifying Air” were exaggerated and untrue. Therefore, the Department of Health referred this case to the Fair Trade Commission (“FTC”) for further investigation.
2. The FTC issued letters to request Quatek and the manufacturer of the product in question, Long Yih Industrial Co., Ltd. (hereinafter called “Long Yih”) to be present at the FTC for explanation. Additionally, upon the investigation of the advertisement in question, cooperation pattern of both parties, sales records and relevant evidence, the findings of the FTC are as follows:

    

   1. Subject of Conduct:

   Quatek and Long Yih entered into a “Sales Contract of Products Sold on Kof World Shopping Website,” in which Both parties agreed to sell products on Kof World's shopping website. Quatek purchased the product in question for NT$1,600 and sold it for NT$2,290 on the Internet. It is obvious that Quatek made profits from the price difference by engaging in the electronic commercial trade of the product in question. Since Quatek made profits from the online trade, said party shall serve more than just an intermediary and shall have the duties of due diligence regarding the truthfulness of the advertisement. Therefore, Quatek shall be the subject of the advertising conduct. It was also found that Long Yih was the party who provided the statements of the advertisement in question. In order to increase the opportunities of sales, Long Yih employed the online advertisement in question to sell the product to consumers through the online trade conducted in conjunction with Quatek. According to the cooperation between Long Yih and Quatek and the sales profits shared jointly by both parties, Long Yih shall also be the subject of the advertising conduct herein.

   2. Cooperation Pattern:

   The purchase order procedure of the product in question is that consumers should place an order through the order placing system (shopping cart) established by Quatek; then, Quatek will consolidate the orders and transfer the same to Long Yih for shipment. The follow-up matters such as online payments, invoice issuance, etc. are also handled by Quatek. Therefore, Quatek and Long Yih work in a complementary relation in the whole trading process.

   3. Authority of Advertisement Modifications:

   Although the advertisement contents were provided by Long Yih to Quatek, Quatek has the authority to add descriptions of product utilization in light of the advertisement statements and specifications provided by the manufacturer.

3. Upon the Department of Health's authentication of the test report prepared by the Industrial Technology Research Institute and provided by Long Yih, it was found that the said test report was merely about the water experiment with no comparison group provided for comparison. Therefore, the test report is unable to prove the claimed effects of “fast dissolvent of utensil and sanitization” stated in the advertisement in question. In addition, the manufacturer failed to submit any information to support the six functions also stated therein. Thus, it is unable to determine the truthfulness of the advertisement in question. Since Quatek and Long Yih are both the subjects of the advertising conduct, both parties shall have the duties of due diligence to confirm the claimed effects. Also, since the aforesaid test report was prepared merely for “water”, Long Yih shall not misinterpret the effects of the product in question to cover other objects and exempt advertiser's obligations of due diligence and truthful representations. Additionally, Quatek shall not exempt itself from the obligations of confirmation and due diligence by claiming that the advertisement in question was provided by another person. It is confirmed that Quatek and Long Yih made false, untrue and misleading representations regarding the quality and contents of the product in question.

Appendix:
Quatek Co., Ltd.'s Uniform Invoice Number: 01508624
Long Yih Industrial Co., Ltd.'s Uniform Invoice Number: 76308373

Summarized by Lin, Jr-Yu; Supervised by Lin, Gin-Lan