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Criminal penalties eyed for malicious online sales in Japan


The government is making the final adjustments to a law revision as it eyes the introduction of criminal punishment for malicious online sales where customers unwittingly sign up for expensive subscription contracts, The Yomiuri Shimbun has learned.

Such sales advertise a purchase that is “free of charge” but in fact sign customers up for expensive subscription contracts.

The Consumer Affairs Agency plans to submit a bill to revise the Specified Commercial Transactions Law at the current Diet session after obtaining approval from the ruling parties. By strengthening the penalties, the government aims to deter fraudulent business practices and prevent damage.

Reports of damage involving online sales have seen a sharp increase in recent years. In such cases, products such as health foods are offered free of charge or at a bargain price on the first purchase. Customers think they are signing up for a one-time purchase when they are in fact signing up for multiple purchases or subscription orders. Unless they go through a cancellation process, they receive the product every month and are charged higher prices for the second and subsequent purchases.

Many of these websites do not clarify that it will be a subscription contract or explain how to cancel it. Some do offer such explanations, but only in fine print in the corner of the webpage.

Such practices have led consumers to sign contracts without realizing what they are actually signing up for, and the agency has called for vigilance against such fraud.

According to sources, the revised law will stipulate that business operators are required to clarify that it is a subscription order on the webpage when a customer is making a purchase. If they intentionally make customers misunderstand by failing to cite the information or displaying it in a false or confusing manner, the responsible individual will be subject to criminal punishment in the form of imprisonment of up to three years or a fine of up to ¥3 million, or both, the sources said.

Under the current law, such practices are subject to administrative penalties including business suspension, but criminal penalties can only be imposed if the violator ignores the penalties and continues to sell products.

In addition, the revision will also prohibit the practice of obstructing the cancellation process, such as not accepting phone calls despite saying that the customer can cancel any time or giving false information. Criminal penalties are being eyed for these practices as well.

A new system is planned that would allow a consumer who mistakenly signs up for a subscription service – believing that it is not – to request that the service provider cancel the order.

According to the agency, consumer affairs centers nationwide received about 56,300 complaints about subscription services last year, a 14-fold increase from five years ago. More than 90% of the complaints were about online shopping, many of which involved health foods and cosmetics products. It is likely that the spread of smartphones and the coronavirus pandemic have contributed to more people shopping online at home, and malicious business practices that take advantage of the trend are thus increasing, according to the agency.

The agency has imposed administrative penalties, including the suspension of operations, on six businesses since December 2019.

Published : February 23, 2021

By : The Japan News/ANN