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Coping with the Menace of False Advertising |
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Besides comparative advertisement, boastful and false claims of function or quality of commodities often cause a great harm to competitors by luring away their customers overwhelmed by a false belief or image of products. However, legal recourses available to those competitors are not so effective and convenient even today. Conservative, sometimes rigid, attitudes in the judicial sections have not proven to be very helpful to lessen the menace of the victims. Diligent vigilance in monitoring the market and seeking prompt assistance from the governmental agencies pursuant to the statutes listed below is the only effective way to maintain fair competition in the market.
Consumer Protection Law
The Consumer Protection Law requires enterprises to provide consumers with sufficient and correct information. The law requires that an enterprise guarantee the correctness of the content of its advertisements and be responsible to the consumers to the extent not less than the contents of the advertisement. (§22, Consumer Protection Law)
The law further stipulates that a public media (i.e. newspaper, radio, TV, magazine and the like) that, being conscious of or being negligently unconscious of the fact that the content of an advertisement is inconsistent with the truth, publishes or reports such an advertisement shall be held jointly and severally liable with the enterprise for any damage of consumers relying upon that advertisement. (§23, Consumer Protection Law)
In case of violation of the above obligations, the respective consumer is entitled to bring a civil lawsuit to recover actual damages and even punitive damages for willful violation. If the violation is serious, a competent administrative authority may order the enterprise to cease doing business. (§60, Consumer Protection Law)
Fair Trade Law
In another respect, the Fair Trade Law also governs marketing claims. Pursuant to Article 21 of the Fair Trade Law, an enterprise shall not make or use false or misleading representations or symbols as to price, quantity, quality, content, production process, production date, valid period, method of use, purpose of use, place of origin, manufacturer, place of manufacturing, processor or place of processing on goods or in advertisements or in any other way that may expose the public to that information.
Similar to the Consumer Protection Law, an advertising agency that designs or produces or an advertising media that publishes or carries false and misleading advertisements and being conscious of or being negligently unconscious of the fact of falsity, shall be jointly and severally liable with the enterprise for compensation of damages. (§21, Fair Trade Law)
In case of violation of the above provisions of law, the Fair Trade Committee (FTC) may order the wrongdoer to stop or rectify its conduct within a prescribed period and may simultaneously impose a fine in the range between NT$50,000 and NT$25,000,000. If the wrongdoer does not comply with the FTC’s order, the FTC may continuously issue orders to stop or rectify and may repeatedly and cumulatively place a fine in the range between NT$100 thousand and NT$5 billion until the violating conduct is stopped or rectified. (§41, Fair Trade Law)
Commodity Labeling Law
Making a fraudulent claim about the origin or source of commodities is another type of false advertisement, which is regulated by the Commodity Labeling Law.
According to Articles 5 and 8 of the Commodity Labeling Law, any packed product shall bear the name and address of the producer. False or deceiving matters in the commodity label are prohibited. Particularly, the administrative authorities shall prescribe a certain period of time for the wrongdoer to correct the violation or to suspend the display or selling of the mislabeled products. Non-compliance with the order on the part of the wrongdoer will result in a fine not less than 5,000, but not more than 50,000 New Taiwan Dollars. An order to cease doing business or to close down may be issued against a wrongdoer in the event of gross violations.
Civil Law and Criminal Law Consideration
A false or misleading marketing claim may constitute a crime of fraud under the Criminal Code. Furthermore, the individual victim (consumer) is entitled to cancel the sale of the products and request restitution.
A Dubious Issue: A Legal Status to Sue:
From the above explanation, some legal recourse may indeed be relied upon to fight against acts of false advertising at a level of unfair competition.
However, whether those legal remedies are available to victims of general false advertising remains very much in doubt. In short, those remedies are primarily targeted to the protection of individual consumers. As most commercial competitors are not the direct victim. of the false advertisement, they possibly are not in a suitable position to sue under the relevant statutes. What those victims can do is to disclose or report the accused violation to the competent authorities and request that the latter initiate administrative or judicial actions.
A preliminary injunction is the most effective legal weapon to prevent or to stop an imminent violation. However, one prerequisite to the preliminary injunction under Taiwan law is the legal requirement to bring a civil lawsuit, and an average competitor may not be able to meet the requirement for financial or reasons so the likelihood of obtaining a preliminary injunction is not high. Such insufficiency of justice cannot be overcome simply by a liberal application of law. Legislative measures are required to redress the menace.
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