萬國法律事務所

On 29 December 2014, Taiwan's Multi-Level Marketing Protection Foundation (“Foundation”) established in accordance with Article 38 of the Multi-Level Marketing Supervision Act (“MLMS Act”) officially commenced operations. As a specialized semi-official foundation similar to the existing Securities and Futures Investors Protection Center and the Travel Quality Assurance Association, the main founding purposes of the Foundation are to mediate Multi-Level Marketing (“MLM”) civil disputes between Multi-Level Marketing enterprise (“MLM enterprise”) and Multi-Level Marketing participants (“MLM participants”), as well as to protect the rights and interest of MLM participants. 

Under the Regulations for the Establishment and Administration of Multi-level Marketing Enterprises and Participants (“Regulations”), the main functions of the Foundation include, among others, assisting MLM participants in initiating litigation pursuant to the Regulations, advancing payment to MLM participants, seeking recovery of damages in civil disputes with MLM enterprises, enhancing MLM enterprises and MLM participants’ awareness of MLM regulations, assisting training activities, and providing information services with regard to MLM regulations. 

MLM enterprises are obligated to make contributions to the protection fund and pay annual fees. MLM enterprises that fail to make the protection fund contribution and or to pay the annual fee will be subject to sanction with an administrative fine under the MLMS Act. Although MLM participants have discretion to decide at will whether to make the protection fund contribution and or pay the annual fee, only those MLM participants and enterprises that have made the protection fund contributions and paid the annual fees may apply for mediation under the Regulations. 

Further, pursuant to the Regulations, a dispute is deemed to be settled when both parties to the dispute reach an agreement. If the MLM enterprise is liable for damages in the settlement, the Foundation will order the MLM enterprise to pay compensation for such damages within thirty days. Within a certain amount of the damages, the Foundation shall advance the payment and thereafter seek recovery from the MLM enterprises if the MLM enterprise fails to pay within the given period. 

Finally, in cases where the same cause results in damages to more than twenty MLM participants or results in claim amounts reaching one million or more New Taiwan Dollars, and where mediation fails, and where the Foundation concludes that the MLM enterprise should be held liable for the damages, the MLM participants may request the Foundation to advance the litigation expenses and attorney's fees up to a certain amount.