Cathay United Bank (
"We urge the bank to show more goodwill and cherish its corporate image," the foundation's chairman Jason Lee (李鳳翱) said at a press conference.
The consumer loan package in question, launched last August, claimed in advertisements that it carries a zero interest rate, but the related costs such as handling fees are equivalent to an annual interest rate of 17.8 percent.
This marketing strategy raised the ire of the Fair Trade Commission, which on March 3 slapped a NT$400,000 (US$13,000) fine on the bank for fraudulent advertising. The non-profit foundation gave the bank until yesterday to take reasonable steps to compensate the 18,000 people who signed up for loans.
In a statement issued yesterday, the bank said it has appealed against the Fair Trade Commission's ruling and therefore cannot make any further response.
After two weeks of media attention, the bank recently decided to lower the package's effective interest rate from the original 17.8 percent to 14.8 percent. Clients can choose to repay the remaining capital in 50-month or 60-month installment programs, the bank's spokesman Joseph Jao (
The bank will suffer NT$750 million in losses as a result of the interest-rate cut, Jao said.
In response to the bank's concession, Lee said the foundation will postpone a proposed group lawsuit against the bank.
Wu Cheng-hsuel (
To snatch a bigger market share in the fast-growing consumer-loans market, financial institutions tend to play on words in advertisements, which leads to a non-transparent transaction environment, Wu said.
To counter this situation, the commission has requested the Ministry of Economic Affairs and the Financial Supervisory Commission to map out regulations by next month that would make it easier for consumers to make comparisons among various financial products.
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