FTC EVISES GUIDELINES ON UNTRUTHFUL ADVERTISING CASES

03/01/2003

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On 5 November 2002, the Fair Trade Commis-sion (FTC) amended its Principles for Handling Cases Under Article 21 of the Fair Trade Law which govern the FTC handling of alleged cases of untruthful advertising. The main contents are as follows:

General provisions:

The provision (old Article 10) is deleted that allowed the FTC to impose a period of corrective guidance in cases where the type of untruthful advertising alleged is widespread in the industry concerned and is related to the nature of the in-dustry. In other words, even where a type of untruthful advertising is widespread in the in-dustry concerned, the FTC may now proceed directly to imposing sanctions for violation of Article 21 of the FTL, without first allowing a correction period.

Complaints:

1.Under a new provision, the FTC's written record of a verbally filed complaint must be dated, read out to the complainant, or oth-erwise made available to the complainant for review before it is signed by the com-plainant (Article 11).

2.To allow complainants sufficient time to produce evidence, the former provision that a complainant must submit related evi-dence within 15 days after making a com-plaint, is amended to require that such evidence be provided within a reasonable time (Article 12).

Investigation of cases:

1.Under a new provision, if it is found on initial examination that the facts or grounds stated in a complaint obviously do not meet the criteria for an offense as defined in the FTL, the FTC may, without conducting an investigation, chose the case and report the same to the commissioners for subsequent ratification. The same applies in cases where investigation shows that there is clearly no breach of the FTL. (Article 16).

2.The time limit for filing a complaint is re-duced from two years to one year. In principle, if a complaint is filed more than 12 months after the date of the advertise-ment in question, the FTC may suspend investigation (Article 17).

3.The provisions on summary procedures are deleted. Except in the circumstances de-fined in Article 16 of the principles, under which after examination and review of a case, a decision to close the case may be sent to the complainant, subject to the commissioners' subsequent ratification, all allegations of untruthful advertising must be reported to the commissioners for con-sideration.

Categories of offending acts:

1.A "statement or representation by a pyra-mid sales enterprise to suggest that par-ticipants receive very large incomes" is removed from the categories of actions that constitute an offense (Article 20).

2.A new provision states that comparative advertising cases should be handled sepa-rately in accordance with the Schedule on Comparative Advertising in Contravention of the Fair Trade Law (Article 22).

3.Under a new provision, the FTC may order an enterprise that violates the provisions on untruthful advertising to publish a correc-tion advertisement, in order to remove or mitigate the harm caused by its untruthful advertising (Article 23).