Internet censorship bill

From the Yomiuri Shimbun on 30th May 2008, LDP, DPJ agreed to pass Internet censorship bill:

The Liberal Democratic Party and the Democratic Party of Japan on Wednesday reached a basic agreement to pass a selective Internet access bill during the current Diet session to protect minors from harmful Web content on cell phones, sources said.

According to the sources, the bill centers on a measure obliging cell phone companies to introduce filtering services to prevent those aged under 18 from accessing potentially harmful Web sites, such as dating sites, with their cell phones.

The House of Representatives’ Special Committee on Children and Youth Affairs is expected to compile the bill by the end of this week to allow it to be passed by the lower house next week and have it approved during the current Diet session.

The article explained the background of the move as follows:

The move came amid growing concern over incidents in which minors have become crime victims through uninhibited access to Web sites. At the request of the Internal Affairs and Communications Ministry, cell phone carriers introduced filtering systems for underage users in January and February.

The article continued:

The bill is aimed at legislating such a system as well as urging the industry to improve filtering technologies, the sources said. Current filtering technologies have sparked criticism as they block access to some unharmful Web sites, including social networking sites and blogs.

Disuputes on e-commerce

The number of consultations which consumer affairs centers nationwide deal with is about 87,000 in 2007 fiscal year; the figure is highest up until now. In 2006 fiscal year, the number was about 39,000, and it was alike in 2005 fiscal year. Compared with previous 2 fiscal years, the increasing in last year was outstanding. From the Asahi on 31th May 2008, an article states.

Feature of consultations

Contents of disputes did not have characteristic features: there was no performance of goods or services in spite of payment; different designed or sized products was delivered; a web service provider sought a customer huge amount payment though the customer thought viewing the site was free.

Is consumes relieved by law?

As long as a present law applied to e-commerce, consumers can not withdraw or cancel the contract by  cooling off rule, whereas the contract by doorstep selling can be cancelled by the rule. The Specific Commercial Trade Act set a turn rule. In distance selling, companies have to stipulate the terms and conditions previously in case they admit the return of goods or services; if they do not disclose the details of the terms and conditions, the interpretation suggests that customers can return goods or services anytime.

Draft bill of the return rule

The government  puts the refom bill of the Specific Commercial Trade Act before parliament: in case the sellers do not state the terms and conditions regarding the return rule, consumers can cancel the contract within 8 days from forming the contract.

However, this law reform is diminishing the right of customers under above interpretation of the current law. The government should revise the law due to that customers can be enjoying an unconditional withdrawal right within certain period. The European Union ‘Distance Selling Directive’ states the consumer’s right to cancel the distance contract within a minimum of 7 working days without giving any reason and without penalty, except the cost of returning the goods.

Why could Japanese consumers not enjoy the withdrawal and cancellation right in distance contracts? There should be no differences between Japanese consumers and European consumers.

Emotionally manipulated salse technique

Taking consultations from fortune-tellers gets hotter; many television programs provide them. Simultaneously, bogus scammers who take advantage of consumers’ uneasiness of future tend to increase.

The number of consultations to nationwide consumer affairs centers in 2007 is 2,928 whereas the number was 1,890 in 2003, the Yomiuri reported.

Swindles under color of trading in “Loco London gold transaction”

The police in Fukuoka, Yamaguchi and Kumamoto raided a trader who was allegedly breach of the Specific Commercial Practices Law. According to the police, the trader was negligent not to explain the trading risk with the capability of falling below par; the company defrauded customers, saying that their transactions were executed by the liable trader. The Asahi Shimbun reported on 26th May 2008:

The Specific Commercial Practices Act prohibits misrepresentaion (sec. 6) as well as imposing to deliver explanatory documents (sec. 4) and the violation of the restriction  consists crime (sec, 70, 72). 

Whilst the misrepresentation concerned is about  the safety of transactions, the police actually seems to suspect that the rogue trader did not have transaction in London.

Is conjac jelly food defective?

Victims claimed damages lawsuits based on the Product Liability law to Nagoya District court on June 15, 2007.

Fatal accident

A consumer filed a petition to conjac jelly food company and Ise Municipal authority in Mie Prefecture. A plaintiff is parent of child who died by sticking conjac jelly food in his throat in March 2007. He was, 7 years old at the accident happened, 1 grade in municipal elementary school. While he was in nursery after school administrated by Ise City, he had snack conjac jelly food in nursery. A defendant company is a manufacture of the conjac jelly food.

Claim

According to the petition of the plaintiff, the conjac jelly food has design defect in its figure and elasticity that is danger of being caught in throat. The plaintiff also points out the design defect of plastic nutshell of conjac jelly food. The nutshell is made in the design that a consumer eats conjac jelly food by inhaling from it.

Although the defendant company stated the caution out of packet that indicated not to inhale to eat it and recommend scooping chewing enough to eat, the plaintiff blamed that it was not enough and the recommendation was necessary to describe that a infant, kid and elderly was prohibited eating it. The plaintiff also said that current caution sought a consumer difficulty to accept it, because the nutshell of the food was too  small to comply it.

The husk is made in the design that the consumer is inhaled food there and eats.The plaintiff claimed the defendants to pay JPY 75,000,000 as damages based on the Product Liability Law 1992.

Accidents

The National Consumer Affairs Center reported 13 fatal accident cases since July 1995 in Japan. The centre recommended that infants and elderly peoples had not to eat it on June 15, 2007 on website.

Warning

In US, the Food and Drug Administration warned that mini conjac jelly candy posed a serious choking risk, particularly to infants, children and the elderly; the FDA also announced a recall by Thomas Diaz, Inc., of Toa Baja, Puerto Rico of 1,500 cartons of Fruzel assorted Natural Fruit Jelly Candy because these products present a choking hazard, on 10th July 2002.

The mini jelly candies come in assorted flavors. Each mini jelly cup is about the size of single-serve coffee creamer. The candies are packaged in 16.5 gram jars with 88 units per jar. These candies contain the ingredient “konjac” (also known as conjac, konnyaku, yam flour, or glucomannan). The Food and Drug Administration and the Consumer Product Safety Commission staff consider this type of candy to pose a serious choking risk, particularly to infants, children and the elderly. There have been six children’s deaths from choking associated with this type of jelly candy throughout the United States in recent years. There have also been reports of deaths in other countries.
“FDA continues to warn consumers about this product, which poses a risk that must not be tolerated,” said Dr. Lester M. Crawford, FDA Deputy Commissioner. Consumers are urged to return this product to the place of purchase

Recall in Canada

After the Canadian Food Inspection Agency (CFIA) has received information from the Consumer Council in Hong Kong that mini-cup jelly products may pose a choking hazard on mid-2000, the agency passed along this information to Canadian people immediately. In addition, the agency issued a mandatory recall order.

The Canadian Food Inspection Agency (CFIA) has been warning consumers not to consume mini-cup jelly products with Konjac listed as an ingredient as they pose a choking hazard. A mandatory recall order has been issued that requires all persons selling, marketing or distributing the product to recall it immediately. Failure to comply with this order can result in fines of up to $50,000 or a jail term. The CFIA is continuing to work toward having all affected product removed from the marketplace.

Ruling in US

According to the New York Times on 14th May 2003, a Santa Clara County jury awarded $16.7 million to a couple whose daughter died after choking on a jelly candy.

The couple, Yvonne and Gil Enrile, sued the Sheng Hsiang Jen Foods Company of Taiwan after their 11-year-old daughter, Michelle, choked in April 1999. The girl remained in a coma until her death in July 2001. Lawyers for the family told the court that the candy contained a substance derived from yams called conjac gel, which does not dissolve in the mouth and must be chewed. The Food and Drug Administration banned the gel in 2001.

Who has jurisdiciton to this hazard?

The National Consummer Affairs Centre has tested the safety of a risk of mini conjac jelly in several times and found the fatal risk of the products; however the centre only could take procedure of warning  its risk to consumers since 1995. Why could not the government ban the gel or take some measure to prevent the fatal damages so far?

What ministry supervise these kind of accidents? So far, there is no administrative body which oversee them. Conjac is food and the plaintiff injured by the food. In generaly, Food is administrared by the Ministry of Agriculture, Forestry and Fishers. On the other hand, the problem related fatal safty is governed by the Ministry of Health, Labour and Welfare.

However, the extent of the jurisdiction of the MAFF is limited within the issue of food labeling; the ministry does not have jurisdiction of the safety. The MHLW has a jurisdiction of personal injuries or fatal damages. But the jurisdiction of the MAFF is limited over accidents which are caused by sanitary problem such as poisoning food. Current regulations related do not include the food safety concerning shape,  design or hardness. Whilst the METI that governs the shape and hardness on industrial products, it has not jurisdiction over food safety concerned.

It is the reason why the Consumer Agency which has comprehensive jurisdiction of food products including “conjac jelly”.

To seek damages from unfair or deceptive businesses on behalf of victims

In April 2008, Fukuda announced a plan to create a consumer affairs agency in the next fiscal year to unify administrative oversight of consumer affairs. In line with his proposal, the panel, chaired by Gakushuin University Prof. Takeshi Sasaki, discussed expected jurisdiction and responsibility. The panel is expected to finish the report possibly in early June and submit it to Prime Minister Yasuo Fukuda.

From an article of the Japan Times on 20th May 2008:

The consumer affairs agency envisaged by the prime minister should be empowered to confiscate proceeds from illegal business practices so they can be used to help compensate the victims, according to a proposal Monday by a panel of experts examining consumer-related policies.

The consumer administration promotion council, set up in February by Yasuo Fukuda, who has pledged to promote “consumer-oriented” policies, is expected to present a report containing the idea for the agency possibly later this month. [...] The agency would also propose laws for compensating consumers who have suffered as a result of illicit business practices, according to the draft document. The agency should consider formulating laws to seize the profits of such businesses as well as to allow the government to seek damages from such businesses on behalf of victims, the document says.

From the Yomiuri on 23rd May 2008:

In the draft, discussed at a meeting and unveiled Wednesday, the panel of experts also proposed a new law that would enable the government to demand compensation from scammers on behalf of consumers who have become victims of illegal business practices.

[...] Toward this end, the panel suggested the agency enhance relief measures for victims, such as seizing profits from businesses that engage in illegal practices. The panel also proposed a new law that would ensure complaints are handled swiftly to prevent bad practices from spreading.

regulations

For recovering illegal benefits gained by organized crimes, the Act for Payment of Recovery Benefit was already enacted in 2006. By the law, victims of specific crimes can get back their damages from benefits that investigation agencies confiscated from gangsters.

However, the law does not entitle the government to seek civil penalty in courts or seek compensation for those harmed by the unfair or deceptive practices. Above report recommends to establish the regime.

 OECD report

The CCP of the OECD held a public workshop in April 2005 on a issue of dispute resolution and redress. in the conference, the Background Report was prepared; the report examines existing mechanisms to resolve disputes and obtain compensation for consumers in OECD member countries, and analyses how these mechanisms operate in practice, including in cross-border cases.

The report underlines the usefulness of Government-obtained redress:

The authority of government consumer protection agencies to recover monies wrongfully obtained by a trader for return directly to consumers can be an important means to alleviate consumer injury and to deter wrong-doing. Mechanisms for government-obtained redress can be particularly useful in cases of fraudulent or deceptive practices affecting large numbers of consumers, especially in cross-border situations. Due to the complexity of such cases, the costs to any individual consumer of taking private legal action will usually far outweigh the harm suffered. As government consumer protection agencies have at their disposal investigative and other enforcement powers that are not available to private litigants, they are
often in a unique position to tackle such cases and secure compensation for consumer victims. At present, government consumer protection agencies in only nine respondent countries have the authority to secure monetary redress for consumers. Proposals to introduce such powers have been made in a further two countries.

Court accused design deffect of “Gacha-pon”

The Namuco Bandai Games is known as a “Gacha-pon” maker in Japan. ”Gacha-pon” is transparent plastic sphere capsules in which small toys are inclosed. Whilst purchasers can get one of capsules in vending machines, they can not know which capsules appear from the machine. The figure of capsules is 40 mm in diameter.

Fact

A child, 2 years old and 10 months, swallowed it by mistake; whilst the capsules was removed from his throat after 30 munits, he suffered low-oxygen injury; therefore residual disability by that he could not move himself remained. His parents claimed that the capsules had design defect and Bandai should pay their son 180,000,000 yen as damage compensation based on product liability.

Ruling

Kagoshima District Court, on 20th May 2008, approved the product liability of Bandai and ordered Bandai to pay about 26,260,000; the court stated that whilst the damage of plaintiffs was 79,540,000 yen, they had comparative negligence and the amount of compensation should be reduced by 70 percent.

Bandai insisted that the capsules met the safety standard regulated by the Japan Toy Maker Association. According to the standard, the size of the capsules should be more than 31.8 mm in diameter, when the intended users were under 3 year old of age.

However, the ruling rejected such claim of the defendant: the width of mouth of infants who were under 3 years of age might be possibly more than 4 cm in diameter and therefore the standard was not enough to prevent accidents; the capsules should be cubic figure to be able to remove from throat or  should have porosity to establish an airway.

Influence of the ruling

In some common law jurisdictions, declaratory judgment is a form of equitable relief.  But, unfortunately, we have no declaratory judgement system. Any court including the supreme court can not make a decision generally and abstractly beyond the concerned case. 

However, I think that this court case might result more than a transfer of money. The Namuko Bandai would appeal this case to the higher court, Fukuoka Court of Appeal. Simultaneously,  the METI would be supposed to seek reviewing the safety standard regarding  a self regulation in the defendant as well as industry associations of this kind of toys to  prevent such a tragedy from ever happening again. The direction or guidance of concerning regulatory authority, the METI, might work significantly to the related maker and industry than the statutory regulations or court decisions whereas It is true that the Namco Bandai is not forced to comply with any requests to change their safety standards.

At present, the government considers establishing a comprehensive administrative body concerning consumer affairs. The comming reform means that the METI would lose his authorities about the consumer protections in his jurisdiction. The METI resists the transferring his jurisdiction to the new consumer affairs department by arguing that the ministry perform his role enough. This ruling might verify such argument of the METI.

Private equities scam

Will unlisted shares go up?  Rogue traders undetake it, and they reccomend consumers to purhcase them. Damage claims have been significanly increasing recently.  According the NCAC, claims concerning private equities in 2005 fiscal years had increased to 1,298 whereas the number of claims in 2004 was 222. 

While many court claims were filed to nationwide courts, judges recognized the illigality of scam trading. Therefore, it affected the court procedure of interrogation. The Tokyo Appeal Court, on 15th May 2008,  approved a customer’s claim without the interrogation of the defendant; the ruling asserted that the sales promotion of private equities should be presumed as fraudulent commercial practices.

Number of heavy debtors decreasing in 2007?

According the Financial Services Agency, the number of over-indebtedness borrowers has decreased in 2007 fiscal year, compared with 2006 fiscal year. It was revealed in the meeting of the Financial Panel Tackling wiht Over-indebtedness.

In the report, heavily-idebted people is defined as individuals who borrow money from 5 money lenders or over. In 2006 fiscal year, number of heavy debeors in 2007 fiscal year was about 1,177,000 whereas it was 1,701,000 in 2006 fiscal year.  The figure was based on the personal information registered in some industrial institutions collecting debtors’ financial information.

The FSA underlined that law reform such as the Law of Reglulating Monery Lenders was effective measure to tackling with over-indebtedness as well as setting up consultation system for heavy debtors.  

Lawful money lenders tend to become reluctant to lend money to heavy debtors; therefore heavily indebted people might be likely to borrow money from loan sharks. However, data of debtors borrowing from illegal money lenders are not collected by the legitimate debtor’s information centres. By above law reform. Provably, number of heavily indebted borrowers might be larger than the statistics figure compiled by the government. 

Land banking scams in Japan

Defrauded consumers by a land-banking scheme are cheated by scammers again and again. The National Consumer Affairs Centre reported the status quo of the injuries in 2006.  The taders invite the former victimes to carry out measurement or advertisement of their plots to promote them; but their real aim is to get the payment of the measurement or the advertisement from the victims. Tokyo metropolitan government revealed the names of 6 land-bank companies that rejected the demand of the disclosure concerning the details of their market promotion.  The latest criminal case was detailed on 9th May 2008.

Up until about 20 years ago, many companies marketing plots of land as an investment opportunity had been damaging a number of consumers located in urban area such as Tokyto and Osaka. This scheme was simlar as a land-banking fraud in UK. 

Rogue traders offered “investment opportunities” to private individuals under a scheme in which fields purchased by the company were divided into plots of land and then sold for investment purposes. Lands sold in Tokyo were located in rural area, Hokkaido, Aomori; Osaka people bought lands situated in Mie, Nara and Hyogo prefecture. Lands acquired were divided into smaller plots and sold to private individuals with a view to be developed as a housing or industrial estates near future.