This content is from: Local Insights

Consumer protection

On June 18 2008, the Amendment to the Act on Specified Commercial Transactions and Installment Sales Act came into force. In Japan, the problem of fraudulent door-to-door sales is a serious social issue. In addition, there have been many problems stemming from internet advertising including unsolicited commercial email (spam), leaking confidential personal information and difficulties with returns and refunds. The amendment revises the laws to cope with these issues and enhance consumer protection. This amendment introduces several new regulations including: (1) a ban against re-soliciting business from customers who have already declined a door-to-door sale; (2) provisions allowing customers to cancel sales involving excessive quantities of products; (3) the strengthening of regulations and supervision of credit providers; and, (4) a ban against the sending of spam.

Under the amendment, if a customer expresses his unwillingness to enter into a sale, a door-to-door salesman may not solicit further business. In addition, prior to soliciting, the seller must attempt to confirm whether a customer is willing to receive any solicitation. Formerly, the regulation only required sellers to make clear their intent to solicit business. The reason for introducing the new regulation is that people who are vulnerable to aggressive sales tactics, such as elderly individuals with impaired judgment, are being relentlessly pursued for business against their will.

In addition, many such individuals are often coerced into excessive spending due to a barrage of solicitations. In these cases, sellers are taking advantage of their customers' vulnerability. Should the seller find a person to be an easy victim, the seller and their affiliates will continue to prey on this person by selling them excessive quantities of products. Usually such fraudulent sales are difficult to rescind because in trying to prove that they were defrauded, plaintiffs often have trouble recalling and reenacting the exact circumstances of each sale. Under the amendment, they do not necessarily need to provide proof of the fraudulent conduct. Such coercive sales can be canceled within one year from the execution of the contract.

The amendment also strengthens the regulation of installment sales. Formerly the law regulated only multiple installment sales, for example, credit contracts with periodic payments that can be used for multiple purchases. But in many cases, those wishing to circumvent the regulation caused consumers to enter into the previously unregulated individual installment contracts _ credit contracts with periodic payments for single-item purchases. In response to the increasing number of reports of complaints regarding individual installment sales, the amendment requires the registration and administrative supervision of both individual installment sales and multiple installment sales. In addition, credit providers are obligated to examine the solvency of each customer and are prohibited from entering into credit contracts with customers not meeting certain requirements.

Finally, the amendment prohibits spam. The former law adopted an 'opt-out system' which meant that if the receiver made clear their desire to opt-out of receiving any further email, sending email after such a notice would be prohibited. But in practice, if a consumer attempted to reject further emails, the rejection itself would merely confirm the existence of a valid address and the sender would continue to send junk mail. The amendment changes this rule to an 'opt-in system', by which, in general, the sender may only send commercial email to a customer that has approved receiving such transmissions.

The amendment regarding commercial email will come into effect within six months of the date of enactment of the amendment as specified by cabinet order. The other part of the amendment shall take effect within one year and six months of the date of enactment as specified by cabinet order.

Hiroki Aoki

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