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Fri, Mar 29, 2002 - Page 18 News List

Chunghwa fined for cheating customers

BUSTED The company was fined for advertising false rates, a week after it warned against a mysterious gadget that enabled criminals to phone on others' accounts

By Annabel Lue  /  STAFF REPORTER

Chunghwa Telecom Co (中華電信) was found guilty by the Cabinet-level Fair Trade Commission yesterday of placing misleading advertisements about their international phone prices.

"Chunghwa's practice has violated the Fair Trade Law and we decided to fine the company NT$1 million (US$28,500)," said Cheng Yu (鄭優), vice chairman of the commission. Later yesterday Chunghwa said the verdict was not acceptable and they will appeal.

"We think the NT$1 million punishment is too high and plan to appeal to the Cabinet," said Len Tai-fen (冷台芬), marketing director at Chunghwa.

In response, Cheng said that when one takes into account Chunghwa's market position -- and the profit they make off international calls -- then the NT$1 million fine is reasonable.

According to the commission the punishment usually ranges between NT$200,000 and NT$300,000, on average -- based on previous cases of misleading advertising.

A state-run telecom giant, Chunghwa ran a promotion between August and September last year, advertising that customers can get five free minutes of international airtime for every two paid minutes.

But it turned out that, buried in the fine print, are conditions that many customers missed.

Only customers who have signed one-year contracts with Chunghwa, or those whose monthly international phone bills surpass NT$1 million, can enjoy the discount plan.

In addition, Chunghwa's ads claimed they offer the lowest rate of all phone companies, but the comparisons they made were not realistically formulated.

"The comparisons were misleading because Chunghwa compared their corporate rates with their competitors' rates for individual users," Cheng explained.

For example, Chunghwa ads suggested that making calls to the US via other operators' services would be charged at NT$2.7 per minute while, when using Chunghwa's service, consumers would only have to pay NT$0.79 per minute -- without mentioning that the rate was for corporate clients only.

"This was the first misleading price-comparison case in the telecom market where the defendant had been found guilty," Cheng said. "But it will certainly not be the last one," he added.

According to the commission, they recently received an increasing number of telecom-related complains, where they had to charge several mobile phone and Internet service operators of placing false advertisements and of over-billing.

"The fierce competition in the telecom market has led operators to conduct bizarre marketing practices," Cheng said.

Mark Chang (張至剛), secretary general of the Consumers' Foundation, agreed with Cheng, saying that companies should watch their behavior.

"Of course, in business companies need to come up with some attractive marketing plans to gain customers, but they can't forget to be honest as well," Chang said.

Chunghwa's case is a good example that not only reminds companies to be more careful in conducting marketing plans, but also encouraging consumers to stand up for their rights, Chang added.

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