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Japan: Act Against Unjustifiable Premiums and Misleading Representations Amended

(Jan. 6, 2015) The Act Against Unjustifiable Premiums and Misleading Representations (Act No. 134 (May 15, 1962)) was amended twice in 2014, in June and November. This Act regulates premiums and representations in connection with transactions of goods and services in order to ensure fair competition and thereby to protect the interests of general consumers. (Hyouji taisaku [Measures Against Misrepresentation], Consumer Affairs Agency website (last visited Jan. 2, 2015).)

June Amendment

The June amendment obligates businesses to set up systems to prevent misleading representations of their services and/or products. (Act No. 134 of 1962, amended by Act No. 71 of 2014, art. 7.) The amended Act obligates the government to establish guidelines that businesses must follow. The government established those guidelines in November 2014. (Guidelines on Measures on Provision of Premiums and Representation [of Products] That Businesses Must Take, Cabinet Office Notification No. 276 of 2014 (Nov. 14, 2014) (in Japanese).)

The Secretary General of the Consumer Affairs Agency can instruct and advise businesses on implementation of the required systems based on the Guidelines. (Act No. 134 of 1962, as amended by Act No. 71 of 2014, arts. 8 & 12.) If a business does not follow the instructions or advice, the Secretary General can give a recommendation to the business and, if it does not subsequently follow the recommendation, the Secretary of General may make public the name of the business. (Id. arts. 8-2 & 12.) Before the adoption of the amendment, a prefecture’s governor could instruct businesses and request that the Secretary General take measures against the business if it did not follow the instruction. (Act No. 134 of 1962, art. 8, before amendment by Act No. 71 of 2014.)

The amendment also enables the Secretary General of the Consumer Affairs Agency to delegate authority under the Act to ministers of the relevant ministries that have jurisdiction over the businesses. (Act No. 134 of 1962, as amended by Act No. 71 of 2014, art. 12.)

November Amendment

The November amendment introduces the imposition of an administrative fine on a business that has made the following misleading representations:

  • any representation where the quality, standard or any other content of goods or services is portrayed to general consumers as being much better than that of the actual goods or services, or much better than that which other businesses supply, contrary to fact; or
  • any representation by which the price or any other trade terms of the goods or services could be misunderstood by general consumers to be much more favorable than the actual goods or services supplied, or to be much more favorable than those of other businesses that supply the same kind of or similar goods or services. (Act No. 134 of 1962, as amended by Act No. 118 of 2014, arts. 5 & 8.)

The administrative fine is 3% of sales that were made during the misrepresentation period. (Id.) When the business that made the misrepresentation proves that it did not know the representation was misleading and that it has paid “a fair amount of attention to” whether it was misleading or not, the administrative fine is not imposed. (Id. art. 8 ¶ 3.) When the business reports the misrepresentation before the government starts an investigation, the administrative fine is reduced by half. (Id. art. 9.) If the business makes a plan to refund consumers to compensate for the misrepresentation, and if such a plan is approved and carried out by the business, the administrative fine is reduced or eliminated. (Id. art. 11.)