Billing fraud
Swindling money using bank transfer systems has been on the rise in Japan, with the number of cases coming to 17,900 in 2007 involving some 25.1 billion yen, whereas the number was about 20,000 in 2004 involving some 28.1 billion yen. The number of scams reach 5,552 until the end of March 2008 involving 7.9 billion yen.
The victims were deceived into transferring money to bank accounts used for fraudulent purposes: many cases are concerning that criminal groups place a telephone call pretending to be a relative, police officer or lawyer and relate a false story, such as the victim’s child was involved in a traffic accident, and that out-of-court compensation be paid; the scammers utilize different name of account holders to prevent identifying themselves.
Under Civil law
It has been possible for such victims to get their money back if they file and win civil lawsuits, but lawsuits impose heavy burdens on victims in terms of time and legal costs.
Under the civil law, victims have to file a lawsuit against the account holder asking reimburse based on unjustified enrichment. then, they can ask banks getting back their deceived money.
But, it may face a difficulty for victims to file those lawsuits when they can not identify the bank holders. The Tokyo District Court resolved this problem over the ruling on 30th March 2005: the ruling approved that victims could seek reimbursement to the banks in the name of unidentified bank holders in case the money remained in bank accounts.
New law
The new law, which was enacted on 21th December 2007 and will go into force 21th June 2008, enables victims to receive money swindled by criminal groups without filing lawsuits.
Measure of relief
The system is applied when, for example, a financial institution freezes a swindler’s account at the request of the police before the criminals withdraw the money.
Financial institutions such as banks, “shinkin” banks and credit union are to freeze funds held at bank accounts at the request of scam victims or police. Financial institutions are required to freeze accounts found to be used for criminal activity.
Under the new law, the Deposit Insurance Corporation will list details of frozen accounts, such as the names of account holders and outstanding amounts of deposited money, on its Web site for at least 60 days.
If the account holders do not object, the corporation then announces on its site that the accounts are covered by the recovery system for at least 30 days.
Fraud victims who transferred money into the designated accounts file applications to the financial institutions during the period and can get back equally divided amounts of the money within the range of their respective damages.
According to the Financial Services Agency, about 170,000 accounts holding about 8.3 billion yen in total were frozen nationwide as of the end of March last year. Included in the total are accounts suspected of being used for money-laundering, which are not covered by the law to aid billing fraud victims. Financial institutions are speeding up work to identify exact amounts seen as the proceeds of billing frauds. The Yomiuri reported on 21th June 2008.
From an article of the Japan Times on 2nd June 2008, about ¥5 billion in frozen bank accounts is likely to be distributed to victims of bank transfer scams after a law to relieve such victims comes into force in June. It is said that the Deposit Insurance Corp. of Japan and financial institutions will cooperate and start distributing the ¥5 billion this year.
Problem remained
However, even under the new law, it will be difficult for them to get all of their money back because criminals usually spend the money before the accounts are frozen.
Furethermore, some hurdles remain. For example, because the frozen accounts from which the proceeds of the crimes are to be returned to victims are listed only on the Internet, an additional task to be undertaken will be notifying elderly fraud victims. The first public announcement under the recovery system is scheduled for July 16. However, elderly victims who are not personal computer users likely will not be aware of the announcement. Therefore, some of the financial institutions, such as major banks, will offer a service with exclusive call centers to tell victims whether they can seek repayment. The Japanese Bankers Association is urging billing fraud victims to ask banks for assistance first.
