28 Apr 2005 - LGM Taiwan violated Fair Trading Act, was fined NT$3 million

28 Apr 2005 - LGM Taiwan violated Fair Trading Act, was fined 3 million Taiwan New Dollars (or about S$160,000)
http://www.ylib.com/class/topic3/sho...&Object=travel
(in Taiwanese Traditional Chinese)

Actual news article first appeared in Taiwanese print media.

Translated full text in English below:
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The Office of Fair Trade has on this date (28 Apr 2005) at the 703th committee meeting, fined Taiwan Ler Ji Mei (known as LGM) for using inappropriate sales tactics in the sale of overseas timeshare memberships. This consists of making consumers place a deposit payment before having surveyed the agreement. As this violates trade regulations, it has been deemed as an unfair practice under the Fair Trading Act Clause No. 24. LGM was subsequently fined 3 million Taiwan New Dollars (or about S$160,000).

The Fair Trade Committee pointed out that LGM in the sale of their timeshare membership, has committed a violation of the Fair Trading Act, by demanding that consumers place their deposit payments via credit card before having surveyed the agreement.

The Fair Trade Committee also explained that the timeshare contracts involved sales representatives who marketed timeshare membership by luring consumers to participate in a Cash-back Scheme, which was run by the Concepts Vacation Company (henceforth known as Concepts Co.) The sales representatives, in their bid to persuade consumers to sign the agreement, emphasised that they were able to recoup their investment in 5 years. However, in reality, LGM was unable to guarantee members the entire cash-back amount. Neither was it able to promise a minimum sum of return. The prerequisites for Cash-back were written at the back of the English version of the Cash-back certificate signed by the member. It stated that the member must reimburse expenses made by LGM to Concepts Co. Even though LGM insisted there was no cash transaction between itself and Concepts Co., the fact that this condition had not been made explicit to consumers, placed the consumers in a very unfavourable position, should they later apply to Concepts Co. for the Cash-back scheme. As the above sales tactics have violated Clause No. 24 of the Fair Trading Act, they are thus deemed as acts of fraud.

The Fair Trade Committee explained that timeshare resorts were based overseas, and were managed as overseas businesses. Consumers thus have to rely on the local marketing agents to provide the sales brochure, verbal explanations and agreement. Consumers are thus in a comparably weak position in terms of knowledge on their rights as members and in their control over the management of the timeshare resort. In order to realize this, one must sign the agreement and place a deposit first. However, the transaction is made under non-transparent circumstances, before the consumer has been given the opportunity to understand the agreement. The committee also noted that LGM insisted on members placing their deposit via credit card before providing the agreement, thus hastening the transaction to be concluded before an agreement had even been made. As this defies trade regulations, it is deemed as an unfair practice and is penalized under Clause No. 24 of the Fair Trading Act.

Upon consideration of LGM’s motives, objectives, anticipation of its ill-gotten gains, its threat to fair trade, its period of existence and its organizational size, the Fair Trade Committee has thus passed the above judgment.

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