Consumer groups decry fraudulent TV direct ads

Song Yuyou, a fish farmer in northeastern China's Jilin province, spends almost every night attending the fish ponds. It is a lonely and often monotonous job.

One day at home, Song saw a television commercial for a well-known domestic-made mobile phone with a TV function.

Song immediately called the sales hotline. He was thrilled when a soft-spoken young woman's voice informed him that, because he was among the first 50 callers that day, he was entitled to a special offer of 398 yuan.

The normal price, he was told, was more than 3,000 yuan.

A week later, Song received a package with an unwelcome surprise inside. The package contained nothing except a few women's beauty products.

When Song called the hotline again, he was told that the delivery had been a mistake. He was promised a handset, but months passed and none was delivered despite repeated calls. Eventually, the hotline was disconnected.

Rapid growth

According to the Jilin Consumers Association, complaints from rural residents about TV direct sales surged from 20 percent to 50 percent in the nine months following July 2008.

As the central government looks to the huge rural market of consumers to help build the national economy, swindlers have discovered great opportunities there, too.

Although TV direct sales have been around for decades, having no direct contact with the products or the dealer can expose the customer to a greater risk of deception, according to consumer watchdog organizations.

A survey in 2006 by the China Consumers Association (CCA) of 30 major TV channels across the country found fraudulent direct sales promotions accounted for 61 percent of illegal TV ads.

Deceptive TV ads exaggerate product performance and effects. They emphasize cheap prices and sometimes recruit celebrities to endorse brands. Misleading content and repeated airing combine to make the ads successful, industry watchers said.

Fraudulent advertisers often provide fake company names and provide a minimum of information about the company address and other contact details.

The operations are scattered. The ad might be aired in Beijing, the hotline registered in another city, products made in a remote province and items mailed from a different place.

When the ad stops airing, the fraudsters move and change the business name.

TV direct sales proliferated in China in the late 1990s, mainly promoting health care products such as appliances for enhancing height or cures for near-sightedness.

Complaints about such sales snowballed and constituted a major target of CCA condemnation every year on March 15, the International Day for Protecting Consumers' Rights.

In August 2006, the agency banned the broadcast of five types of ads, including products for reducing weight or enlarging breasts, as well as certain others advertising medicines and medical equipment.

TV direct sales volume

According to the China TV Sales Research and Development Center, affiliated with the Beijing University of Posts and Telecommunications, TV direct sales accounted for 0.15 percent of China's total retail sales in 2008.

The figure for the United States was 8 percent, and it was more than 10 percent for the Republic of Korea.

Lack of public trust in the industry has hampered the platform's development in China, the report stated.

"TV sales have an enormous potential. What is missing is regulation," said Ye Maozhong, a brand management specialist.

Regulation of TV advertising involves several government departments and institutions.

Celebrity endorsers can become easy targets, industry observers said.

Last year in the midst of the melamine milk contamination scandal, Liu Guoliang, head coach of the National Table Tennis Team, apologized under media pressure for appearing in an ad for Yili milk products and offered to donate his earnings to the treatment of victims.

"Stars should be cautious about signing ad contracts. They should be held accountable for knowingly saying things that are not true," an industry observer said.

"But it is unfair to rebuke them for a government license or certificate obtained illegally and covertly by an advertiser. The check on such behavior must be imposed elsewhere," the observer said.

Stopping frauds

TV operators could effectively stop frauds if they stepped up the examination of advertisers' credentials and demanded strict compliance with standards, the observer said.

"Fraudulent TV ads are typically cases of negligence in enforcing the law," said Zong Shouyun, publicity and education director for the Jilin Consumers Association.

"The media should assume responsibility for all the losses caused by deceptive ads," Zong said.

Zhong Ping, deputy secretary general of the Changchun Consumers Association, said swindlers should be severely punished.

"Let them pay a heavy price, and cheating companies will disappear," Zhong said.

At a public forum held in June in Shanghai, Ren Qian, a deputy division chief with the State Administration of Radio, Film and Television, said his agency was working with the State Administration for Industry and Commerce on new regulations to standardize the operation of TV direct sales.

"Requirements on the advertiser's entry qualifications and airing times will be more specific. Rule-violating TV operators may lose their operating licenses," Ren said.

Television stations could take their cue from the Internet, he said.

One example is the Taobao website's credit appraisal system and third-party payment mechanism, which have been effective in preventing fraud, Ren said.

Zong of the Jilin Consumers Association said that governments could sponsor publicity campaigns to educate rural consumers.

Consumer Song can't remember which television channel aired the advertisement to which he responded.

Song said he has given up trying to recover his money. But, he added, he's unlikely to buy anything via TV anytime soon.

Xinhua

(China Daily 07/20/2009 page5)