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Introduction of Consumer Protection in Taiwan, Republic of China

I.

Introduction

Todays governments are gradually beginning to pay more emphasis on consumer


protection instead of nurturing and protecting their domestic industries. It is hoped that
improved consumer protection will foster healthy competition and the development of good
relations between consumers and the industries that serve them. Since consumer protection is
considered one of the basic duties of governments today as well as an important marker of a
nations progress, Taiwan also sought to keep up with this worldwide trend. To that end, on 11
January 1994, it promulgated the Consumer Protection Law, and on 1 July that same year it
established the Consumer Protection Commission. The Consumer Protection Law further
stipulated that relevant agencies in the central government and local governments were the
main authorities in charge of consumer protection. This formally brought the concept of and
the responsibility for consumer protection into the administration of government, thereby
putting consumer protection rights into practice.
Following the global trends of internationalization, computerization, and liberalization,
Taiwan is accelerating the rate at which it is relaxing various restrictions on commercial
activity. As a result, its economic and social environment is undergoing vast, rapid changes. In
the area of consumer protection policy, the government has been ensuring consumer safety
and fair trade through regulation and guidance of business operators, so that they provide full,
accurate information to consumers. It has also engaged in various forms of consumer
education activities, raised the level of consumer consciousness and self-awareness among the
citizenry, striven to establish a reasonable consumer environment, provided guidance to
consumer protection groups, respected the consumers right to choose, and given consumers
the right to engage autonomously, reasonably, and correctly in various kinds of consumer
activity, according to the direction of their thoughts. Furthermore, when consumer disputes do
arise, consumers can indeed quickly obtain appropriate redress or compensation without
spending huge amounts of money. Finally, in response to changes in the business
environment, the government adopts various measures to prevent consumers from having to
face major difficulty.
II.

Current status of Taiwans economic and trade development

A. Foreign trade
In the past decade, Taiwans economy has grown rapidly and gradually caught up with
the economies of developed nations. In 2002, Taiwans total foreign trade amounted to
US$243.2 billion, of which exports totaled US$130.6 billion and imports US$112.6 billion.
Based on WTO trade statistics, Taiwan in 2002 ranked as the worlds 16 th largest trading
nation. Meanwhile, since Taiwan is one of the worlds leading exporters of information
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technology (IT) products, it is an active participant in the development of the global digital
economy (for the export value of IT products, see Annex I). As our economy becomes more
and more closely linked with the rest of the world, and as cross-border trade in goods and
services increases with each day, issues in cross-border consumer protection are also expected
to increase.
B. Development status of B2C e-commerce
In 2002, 8.35 million people in Taiwan, or 37% of the population, were connected to the
Internet, while an estimated 53% of households were connected. Thus the Internet
connectivity rate has already reached a critical scale. As for consumer spending on-line, the
total in 2001 amounted to US$246.2 million, with an average expenditure per person of only
US$29.50. This figure accounted for 0.3% of the retail market. In 2002, however on-line B2C
transactions reached US$450 million, 77% more than that of 2001, and amounted to 0.5% of
the retail market. On the other hand, as many as 49% of Taiwans netizens have purchased
products or services on-line, and up to 36% have engaged in on-line transactions more than
twice. This shows that Taiwans on-line consumer market has great growth potential (for the
e-commerce market status of Taiwan, see Annex II).
As consumer habits change and the Internet consumer environment matures, we
anticipate that by 2003 the amount of on-line B2C will reach US$500 million, and that fastgrowing sectors will be financial services, travel services, 3C products, on-line gaming, books
and magazines, and cosmetics.
III.

Brief introduction to Taiwans Consumer Protection Law

Taiwans Consumer Protection Law went into effect on 11 January 1994 and was revised
in January 2003. It contains a total of 74 articles in seven chapters. The main contents of each
of the seven chapters may be described briefly as follows.
Chapter IGeneral Principles: (Articles 1 to 6) sets forth the legislative goal of this law,
as well as the relationship between the application of this law and other laws concerning the
protection of consumers (Article 1); provides definitions (Article 2); clearly states the
measures that the government, business operators, and consumers should take to achieve the
goals of this law (Articles 3 to 5); and identifies the competent authorities for this law (Article
6).
Chapter IIInterests of Consumers: includes Articles 7 to 26 and is divided into four
sections covering: (1) responsibility for defective products or defective services, including
safeguards of health and safety (Articles 7 to 10a); (2) standard contracts (Articles 11 to 17);
(3) extraordinary purchase and sale, such as mail order, door-to-door sale, spot goods offer,
and installment sales (Articles 18 to 21); and (4) consumer information such as advertising,
signs for goods or services, written guarantees, and packaging (Articles 22 to 26). This
chapter is the most important part of the Consumer Protection Law, since it protects
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consumers health and safety, establishes rules for fair trading, ensures the consumers obtain
full and accurate information, and provides the basis for consumers to claim their rights.
Chapter IIIConsumer Protection Groups: includes Articles 27 to 32 and items
regulating consumer protection groups qualifications, their founding purpose, duties, and
limits.
Chapter IVAdministrative Supervision: includes Articles 33 to 42. Besides specifying
the governments investigative powers and powers in handling emergencies, it states that the
government must install the Consumer Protection Commission, consumer ombudsmen,
Consumer Service Centers, and so on. The law also specifies the duties of these officials and
agencies.
Chapter VThe Handling of Consumer Disputes: consists of Articles 43 to 55 and is
divided into two sections: complaint and mediation procedures for consumer disputes
(Articles 43 to 46) and consumer tort actions (Articles 47 to 55). Concerning mediation,
Article 45 specially requires the establishment of the Consumer Dispute Mediation
Commission. As for consumer tort actions, Article 50 creates the category of consumer class
actions; Article 53a injunctions; Article 49 the authority of consumer protection groups to
raise consumer tort actions; Articles 52 and 53b the granting of exemption from court fees. In
addition, Article 51 sets regulations on punitive damages in consumer tort actions.
Chapter VIPenalties, which includes Articles 56 to 62, sets forth the penalties to be
imposed on business operators who violate the provisions of this law. The competent
authority may, depending on the situation, impose an administrative fine or order the
discontinuation of operations or business.
Chapter VIIAncillary Provisions, which includes Articles 63 and 64, stipulates that the
Executive Yuan is to draw up the Enforcement Rules of Consumer Protection Law and
specifies the date that the Consumer Protection Law goes into effect.
IV.

Introduction to Taiwans consumer protection systems

A. The establishment of the Consumer Protection Commission


As stipulated in the Consumer Protection Law, the Consumer Protection Commission
(CPC), Executive Yuan was established on 11 July 1994. The Vice-Premier of the Executive
Yuan serves as the CPC Chairman. The other commissioners include the heads of related
ministries, representatives of national consumer protection organizations, representatives of
national businesses, scholars and experts. The CPC is thus a cross-ministerial agency (for the
organization chart of CPC, see Annex III). Its primary duties include: setting the nations
basic policies on consumer protection; assisting, coordinating and supervising relevant central
and local government agencies in carrying out the world of consumer protection; and
regularly announcing the outcomes of consumer protection action.

B. Responsible agencies
Based on the provisions of the Consumer Protection Law, the agencies that actually carry
out the task of consumer protection centrally are the agencies in charge of regulating each
industrial sector; locally the task of consumer protection is carried out by the governments of
special municipalities and counties (for details on the consumer protection system, see Annex
IV). Besides carrying out consumer protection work and monitoring businesses in accordance
with the laws and regulations by which they themselves are governed, the various central
government agencies and the local governments may, based on the provisions of the
Consumer Protection Law, conduct investigations, mete administrative punishments (such as
ordering corrections within a certain period of time, recalls, or destruction of goods), order the
cessation of operations or closure, issue fines, refer cases to criminal courts, etc.
C. The establishment of the Consumer Service Centers and their duties
The Consumer Service Centers are Taiwans most base-level units implementing the
work of consumer protection, and they maintain the closest relationship with consumers. As
stipulated in the Consumer Protection Law, each local government was required to set up a
Consumer Service Center. The most important tasks of these Centers include handling
complaints, providing consulting services, handling education and promotion, etc.
D. The Consumer Dispute Mediation Commission
Each local government was also required by the Consumer Protection Law to establish a
Consumer Dispute Mediation Commission. These Commissions are made up of government
representatives, consumer ombudsman, and representatives from consumer protection
organizations, businesses or representatives of professional organizations, and each is chaired
by a consumer ombudsman (for the procedure of consumer dispute mediation, see Annex V).
E. The Consumer Ombudsman
Based on the Consumer Protection Law, the CPC and each local government were
required to install consumer ombudsmen, of which there are presently a total of 34 throughout
Taiwan. The primary duties of these consumer ombudsmen are: (1) handling complaints; (2)
presiding over mediations; (3) approving the consumer protection organization to raise class
action suits for damage to consumers or seek legal action for injunctions; (4) seeking court
injunctions against businesses to stop or prevent major violations of relevant provisions in the
Consumer Protection Law.

1.
2. Case Study

VI. Taiwans current measures in e-commerce consumer protection


A. Establishing regulations in e-commerce consumer protection
Due to the global, technology-intensive, fast-changing, and anonymous qualities of ecommerce, the consumer protection issues that derive from it are far more complex than for
other forms of transaction. To establish consumer confidence in e-commerce and promote its
healthy development, Taiwan put into effect an E-commerce Business Self-Regulatory
Agreement in 1999, and in 2001 it completed a study on a mechanism for promoting
outstanding e-businesses. E-commerce has also brought the emergence of new problems in
consumer protection, such as transaction security, protection of privacy, Internet fraud, and
cross-border consumer disputes. For this reason, Taiwan enacted the Computer-Processed
Personal Data Protection Law in 1995 to regulate the gathering and use of personal data by
government agencies and businesses. In 2001, Taiwan established the Guidelines for
Consumer Protection in Electronic Commerce in order to ensure fairness of trade and protect
consumer rights. At present we are promoting the information disclosure through the Online
Trust Store Bulletin Board and the use of trust marks issued by the self-disciplinary E-Shop
Authentication Organizations. All businesses involved in B2C e-commerce are encouraged
to join the Online Trust Store Bulletin Board or receive certification from one of the EShop Authentication Organizations. They are encouraged to display the trust marks on their
websites, show that they are willing to abide by the various consumer protection policies and
e-commerce principles of the organizations of which they are members, and continue striving
to provide a better e-commerce environment for consumers.
B.
With the explosive growth of the Internet, many businesses sought to use it to provide
business opportunity, but various kinds of cross-border cybercrime and deceptive practices
have appeared as well. These seriously violate the rights of consumers. In light of this, Taiwan
has actively investigated several such recurring cases, and it has compiled and classified the
common types of illegal behavior. The authorities then use various media to raise consumer
awareness of these kinds of behavior. This two-pronged effort will be very effective in
protecting consumers rights in e-commerce.
sFurthermore, a regulation by which telecommunications enterprises are required to halt
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telecommunication service to those who use telecommunications to provide content that


disturbs public order or morals may be used to halt cyber crime. Taiwan has already guided
Internet service providers in establishing the Taiwan Internet Association and putting into
effect an Internet Service Providers Self-discipline Code of Conduct. By means of this,
Internet content rating and filtering systems are being established, investigation of cyber
crime facilitated, and a more healthy Internet environment has been established.
Due to the professional, technical nature of cyber crime, it is really challenging for
prosecutors and police officers who have no expertise in computers and networks to learn the
techniques to pursue cyber crime and seize digital evidence. In light of this, Taiwans judicial
officials researched the various forms of cyber crime and consulted American and European
laws and regulations on cyber crime to draft our current laws in this area. Meanwhile, law
enforcement officials are holding frequent seminars on investigating cyber crime and holding
practical experience exchange meetings with their counterparts in other countries, so police
investigators can keep abreast of the advances being made in IT law.
1. In 1999, it was discovered that a 17-year-old hacker established a hyperlink to a banks
website and successfully obtained the account numbers and passwords of more than 20
bank customers.
2. USD 1he customers wanted to establish contact, they would be intimidated with
threats of revenge.
3. solved a case in which a person with a Ph.D. in criminology and five years teaching
experience in criminal psychology in one of Taiwans judicial agencies was
successfully cheated in a cyber-scam.oducts over the Internet, they are usually rare
items having a high unit price. However, the suspect sets a minimum bid price lower
than the usual market price in order to attract and hook a greater number of people.
1. same place. He or she usually goes to an Internet s police bureaus, in ttwo yeare nu
cyber involved the use of Internet cafs has grown nearly ten times. Tthere are large,
fluid groups of caf customers, and he or she will go to a different caf for each crime.
This makes it more difficult for the police to trace the IP and find the suspect.
Furthermor task not have video surveillance equipment. There are approxian, and they
have an extremely large customer base. The open, mobile nature of these cafs has
made them the pri cyb
2. Suspects will also use phony bank accounts. These are quite easy to purchase:
nowadays, to avoid detection, suspects might use phony identities to apply for bank
accounts and ATM cards. Or they might purchase phony savings accounts and ATM
cards on-line or through flea market magazines for USD$30-1After the money is
wired into suspects bank accounts, they immediately withdraw it from ATM
machines, usually with their faces covered in one way or anotherusually face masks
and motorcycle helmets. To prevent the police from freezing the phony accounts they
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use, the suspects will go all over to different locations to withdraw the money as soon
as they manage to defraud their victims. They will also alter the time they usually go
to withdraw the money. Even if the police obtain a photo of the suspect, the lack of
facial recognition technology and other data for making face matches means that the
police often cannot identify it.
C.
VII. Conclusion
Taiwan is one of the worlds most important IT producing countries, and due to the
globalization trend, its interaction with the international economy is becoming closer by the
day. Considering the borderless nature of e-commerce and the possibility that e-commerce
may become the main mode of commerce, both Taiwans government and private sector have
been putting great effort into promoting e-commerce trading. In the future, on-line
international trade in goods and services is bound to increase and will occupy an important
position in world economic and trade activity. Therefore, each countrys strategy-making and
response measures on consumer protection issues relating to cross-border trade should
naturally keep in step with the rest of the world in order that consumers everywhere can enjoy
the same level of protection.
We understand quite clearly that the work of consumer protection today is not purely a
matter for any one country to handle on its own. Therefore, Taiwans future work in consumer
protection will consist not only of continuing to establish a better administrative regime in this
regard but also observing carefully international trends in consumer protection. To address the
problem of protecting consumers from cross-border crime, Taiwan will also study and adopt
concrete measures that will serve to hasten the resolution of international consumer disputes.