Newsletter
FTC DRAFTING LEGISLATION ON MULTILEVEL MARKETING
At a meeting on 22 July 2004, the Fair Trade Commission (FTC) approved a draft of the pro-posed Act Governing Multi-Level Sales. The planned legislation is intended to establish a comprehensive regulatory system for multi-level sales marketing, and to strengthen the regulation and supervision of multi-level sales businesses.
At present, the regulation of multi-level sales activities is based mainly on five articles (Arti-cles 23 to 23-4) of the Fair Trade Act (FTA), and on the Supervisory Regulations Governing Multi-Level Sales which was made based on the delegation granted under the FTA. The Regula-tions, being an administrative order rather than a law, are inadequate to effectively govern the se-rious societal problems caused by unscrupulous use of multi-level sales methods to commit widespread fraud. Furthermore, the regulation governing multi-level sales is different in nature from competition regulation, which seeks to combat anticompetitive behavior and unfair competition; and the factors to be considered in defining violations, and the criteria for judging and punishing them, are also different.
Consequently, attempting to regulate multi-level sales, anticompetitive behavior and unfair com-petition all under the FTA makes it difficult to achieve effective regulation. To create a more appropriate regulatory framework, the FTC has drafted the proposed Act Governing Multi-Level Sales, based on the relevant provisions of the FTA and the Regulations, and taking into con-sideration the current state of multi-level sales activities in Taiwan.
The legislation is currently still at the drafting stage, and the FTC will hold public hearings to solicit opinions from various segments before finalizing its draft.