Taipei High Administrative Court Judgment regarding false claims about the value of its giveaways and concealment of important trading conditions by Cosmos Bank, which violated the Fair Trade Law due to being false and misleading representations

Taiwan

Case:

Taipei High Administrative Court Judgment regarding false claims about the value of its giveaways and concealment of important trading conditions by Cosmos Bank, which violated the Fair Trade Law due to being false and misleading representations

Key Words:

false claims about the value of giveaways, false and misleading

Reference:

Taipei High Administrative Court Judgment (91) Su Tzu No. 1088

Industry:

Domestic Banks (6212)

Relevant Law:

Article 21 of the Fair Trade Act

Summary:

1. The defendant in the present case, the Fair Trade Commission (FTC), conducted an investigation and discovered that, when jointly publishing advertisements about their “e-Gate” giveaway, the plaintiff, Cosmos Bank, together with Chia Shu Technology Co., Ltd. (Chia Shu), Chung Shing Bank, and Taiwan International Investment Management Co., Ltd. (TIIM), violated Article 21(1) of the Fair Trade Law as applied mutatis mutandis through Article 21(3) with their false and misleading representations as to the value of the giveaway and with their concealment of important trading conditions. Pursuant to the forepart of Article 41 of the same Law, the FTC ordered the plaintiffs to cease such violation the second day following the service of the disposition and imposed on it an administrative fine of NT$50,000. Unwilling to accept the disposition, the plaintiff filed an administrative appeal, and after the appeal was dismissed, commenced the administrative action at issue.

2. The plaintiff, Chia Shu, Chung Shing Bank, and TIIM jointly published an advertisement regarding “e-Gate” in the Economic Daily News on 17 April 2000 with content such as “…bring home the e-Gate, valued at NT$120,000.” The perception of the general or relevant public would be that the advertisement meant that the market value for the giveaway was NT$120,000. Upon investigation, however, the giveaway was priced only at NT$43,000. Obviously, the advertisement contained a false and misleading representation that was cable of misleading consumers into undesired transactions. Secondly, the advertisement at issue stated, without affixing any additional conditions, the words “Open your account at the TIIM, Cosmos Bank, or Chung Shing Bank now and get yourself an e-Gate with its superb functions.” However, the FTC discovered that “An applicant must possess a account at either Chung Shing or Cosmos bank and open a securities account at TIIM with NT$15,000 in the account as the security deposit. If so, he will receive a refund of NT$15,000 when placing orders for securities totaling NT$30 million within three years, or NT$10,000 when renting a total of 700 videos within three years. NT$2,500 is also required for installation of the e-Gate.”
The complimentary gifts and prizes given away by an enterprise for promotional purposes always attract consumers. Limitations such as the nature of the giveaways, their duration, quantity, methods and other restrictive conditions were deemed to be important trading information capable of affecting a customer's choice of whether or not to make a purchase. Therefore, it is important for an enterprise to make a clear and specific representation when publishing major trading information in its advertisement. In the present case, the plaintiff and other respondents failed to specify the requirements for obtaining the complimentary gifts which were used as an inducement to trade, an act capable of misleading general consumers into mistakenly believing that an account was all that was needed to get a free gift. It was obvious that such an act constituted a misleading representation.

3. According to the plaintiff, it was clearly stipulated in the representations and warranties to the contract between it and Chia Shu that the contested project was to be carried out by Chia Shu. It was agreed upon in Article 2, paragraph 8 of the contract that Chia Shu was to take sole responsibility for promoting and advertising the project. There was no principal-agent relationship between the plaintiff and Chia Shu, and the plaintiff was neither aware of the advertising contents nor involved in any proposal or act of advertising. Nevertheless, it was discovered that the terms “website-based multi-function DVD,” “home page,” “online services,” and “online transaction” were defined in Article 1 of the “e-Gate Project Bank Contract” entered into between the plaintiff and Chia Shu. Under Article 2, paragraph 8 of the contract, Chia Shu was supposed to take responsibility for promoting and advertising the project. These stipulations were sufficient to support the fact that the plaintiff did commission Chia Shu to handle such matters and that the contract was a principal-agent contract as defined under Article 529 of the Civil Code. Clearly, the plaintiff should be responsible for monitoring the advertisements designed and produced by Chia Shu on its behalf so as to avoid mistaken beliefs or expectation by consumers (see Supreme Administrative Court Judgment (90) P'an Tzu No. 444). The plaintiff's name was printed on the advertisement, so the contention that its interactions with Chia Shu were merely “internal relations” was untenable, as was the contention that it was unaware of the advertising contents and that the advertisement was published without its approval. In short, the plaintiff was the advertiser at issue. The defendant ordered the plaintiff to cease the violation the second day following the service of disposition and imposed on it an administrative fine of NT$50,000 pursuant to Articles 21(1), 21(3) and 41 of the Fair Trade Law. The defendant's disposition was not unfounded, while the plaintiff's motion for revocation was groundless and thus dismissed.

Appendix:
Cosmos Bank’s Uniform Invoice Number: 86517321
Chia Shu Technology Co., Ltd.’s Uniform Invoice Number: 70630781
Taiwan International Investment Management Co., Ltd.’s Uniform Invoice Number: 96977203

Summarized by Lai, Chia-Ching; Supervised by Wang, Rong-Ging