Taiwan���s New Anti-Fraud Act Becomes Effective: Strengthening Obligations for Youtube, Facebook, TikTok and Other Major Platforms Delivering Commercials

On July 31, 2024, Taiwan���s new legislation Anti-Fraud Act (the ���Anti-Fraud Act���) takes effect, significantly increasing the responsibilities of Internet platforms with commercials as well as telecommunications, payment services, online games and e-commerce service providers in preventing online fraud. This Anti-Fraud Act is a direct response to growing concerns over telephone and online fraud, as well as deceptive advertising practices.

Internet platforms, presenting, posting or delivering commercials within the territory of Taiwan are likely to be most affected by this Anti-Fraud Act. Such platforms that meet the thresholds set by Taiwan���s regulators must appoint a local legal representative (���Taiwan Legal Representative���) which shall be either a Taiwanese citizen or entity, and register this appointment with Taiwan regulators if they do not have a branch office or other presence in Taiwan. The Taiwan Legal Representative is tasked with receiving notifications from regulators regarding enforcement and compliance of the Anti-Fraud Act and assisting the platform in fulfilling its obligations under the Anti-Fraud Act. Essentially, appointing a Taiwan Legal Representative obligates the platforms to establish a presence in Taiwan, facilitating enforcement actions by regulators. Additionally, other Taiwanese government authorities may deliver notifications or requests to the platform through its Taiwan Legal Representative for matters beyond the scope of the Anti-Fraud Act. This could significantly increase the platform���s exposure to Taiwanese law enforcement.This requirement to appoint a Taiwan Legal Representative is unprecedented in Taiwan.

Following the enactment of the Anti-Fraud Act, Taiwan���s digital economy regulator, the Ministry of Digital Affairs (MODA), which has jurisdiction over the enforcement of the Anti-Fraud Act, has established the thresholds for internet platforms that are obligated to appoint a Taiwan Legal Representative. The thresholds include: (i) the risk of the platform being used for fraudulent advertisements, and (ii) whether the platform���s unique monthly visitors (calculated by IP) exceed 5% of the total population of Taiwan. Based on these thresholds, MODA has identified Google, YouTube, Line, Facebook, Instagram, TikTok, as meeting the thresholds and thus required the companies operating these platforms to comply with the Taiwan Legal Representative appointment requirement.

In addition to appointing a Taiwan Legal Representative, the said platforms that meet the thresholds are also subject to the following requirements:

��� Identity Verification: platforms are mandated to implement security measures to verify the identities of the advertisers and funding sources, using methods such as digital signatures or rapid identity verification mechanisms.

��� Risk Assessment and Reporting: platforms are required to assess potential fraud risks associated with their advertising services, develop anti-fraud plans, and publish an annual transparency report. This report should include active user statistics, summaries of anti-fraud activities, and data on handling fraudulent advertisements.

��� Advertisement Disclosure: when publishing or promoting advertisements, platforms must clearly label them as advertisements and disclose information such as the identities of advertiser and funders, advertising permit numbers, and any use of deepfake technology or AI-generated personal images. This information should be clearly presented on the advertisement; however, if space is limited, detailed information of the advertisers and funders can be provided via a clickable link.

��� Prompt Action on Fraudulent Advertisements: if notified by judicial police or relevant regulatory authorities that an advertisement is fraudulent or clearly related to fraud, platforms must remove, restrict access to, or cease broadcasting the advertisement or take other necessary actions within 24 hours. Furthermore, users posting fraudulent advertisements or operating fraudulent accounts must have their services suspended for a reasonable period, upon notification by the authorities.

Non-compliance with these obligations may result in administrative fines up to NT$100 million, depending on the severity of the violation. Continued non-compliance could lead to further regulatory actions, including traffic management controls, stop resolutions, and access restrictions, although the effective date for these measures has yet to be determined.

In addition to Internet platforms delivering commercials, the Anti-Fraud Act imposes new obligations on Taiwan���s telecommunications service providers as well. They are required to implement reasonable anti-fraud measures, including implementing KYC procedures that verify user identities through government databases before providing services. If regulators notify them of fraudulent activity, service providers must cease services for users engaged in fraud and face a two-year ban from service resumption. Roaming services are also prohibited for users of high-risk offshore providers that are not based in Taiwan.

Payment, online gaming, and e-commerce service providers are also mandated to implement anti-fraud measures and maintain relevant records to ensure compliance with the Anti-Fraud Act.

Contact

English translations of telecommunications and media laws and regulations are available from YANGMING PARTNERS��� Legal Support Department. This publication is intended to highlight selected legal developments and not to be comprehensive nor to provide legal advice. If you have any questions on issues reported here or if you have any issues you would like to see covered in future editions, please contact the editors: Robert C. Lee, at +886-2-8725-6601, [email protected] If you are interested in subscribing to any of our newsletters, please click here.