It was  driven under by a flood of claims from customers seeking reimbursement of excessive interest charges, adding to a sharp drop in demand for new loans. The company’s total liabilities stand at about 400 billion yen, and the amount of excessive interest charges–both claimed and not claimed–may ultimately reach a few hundred billion yen.  Takefuji was forced to return 86.5 billion yen in excessive interest charges in the 2009 fiscal year ending in March. For fiscal 2008 ending in March last year, Takefuji posted an after-tax loss of 256 billion yen. Takefuji’s outstanding loans at the end of June stood at 510 billion yen with about 970,000 customers holding accounts. Both these numbers were about 30 percent of the company’s peak in 2002.

Consumer lenders have been struggling to survive since a 2006 Supreme Court ruling found their “gray zone” interest rates–from 15 percent to 29.2 percent–to be illegal. Many customers started demanding refunds of excessive interest charges.

According to the National Consumer Information Centre, the number of this kind of complaints received by the centre was peaked in 2005 fiscal year; 9,933 cases. The number had been decreasing, and it was recorded 5,315 cased in 2008 fiscal year.　The number, however, turned  increasing in 2009 fecal year, and reached 1,234 cases during 3 months from April to June in 2010 fiscal year, the damages was JPY 1,516,000,000., whereas it was 481 cases and JPY590,000,000 of damages in same period in 2009 fiscal year. Complaints include aggressive sales to unnecessary repairs and excessive expensiveness of  repairs fee. 60% of victims are elderly people, 60 years old or over.

Many businesses to conduct this sales are supposed to  rogue traders who were imposed to administrative or criminal sanctions by virtue of wrong doing. But they continue such fraudulent business by changing name. A rogue trader whose 8 employees was arrested in  July 201o,who had  been imposed business suspension order during 6 months in March 2009, was conducting his business by establishing other legal entity by another name his business name and the damages was estimated as 1,400 cases and  JPY760,000,000. 

According to the Osaka Police Department, the accused visited elderly peoples and offered cleaning waterspout for free. The accused, then, threatened a consumer that  roof of his house was damaged and might be roof leak or broken seriously by earth quake happened  if the roof  was not repaired, or more damaged. Then, the accused made contract of home repair with consumers who believed the fraudulent explanation by the accused.

To comply with this situation, some institutions are set up assistance scheme to help indebted consumer. One of the scheme is the General Assistance Fund or the Welfare Fund which have is established and are managed by the Social Welfare Society. The General Welfare Fund loans money for the purpose of filing bankruptcy;  the Welfare Fund loans operating fund to a small or medium-sized business.

Police searched about a dozen locations Tuesday related to five Tokyo companies connected with suspected illegal practices related to drop shipping. The Metropolitan Police Department search follows a May 27, 2010  raid of Site Inc., a Web-related company in Taito Ward, Tokyo, that allegedly provided false information to a Kawasaki woman, telling her she would get a return on her investment in a drop shipping business in a few months. The Yomiuri Shimbun reported it on an article on 28 June 2010.

The companies are suspected of violating the Specified Commercial Transactions Law for providing false information and other charges. At least three of the five companies are believed to have solicited customers by using the same method as Site, and consumer affairs centers across the nation have received complaints about them.

In 1983, the Ministry of Finance issued the legislation which permitted money lenders to hold certain interest even if it  was beyond the legitimate interest rate due to the Interest Rate Cap Law, if money lenders performed their obligation requirements by the law. However, the Supreme Court,  January 2006,  stated that the legislation was considered illegitimate against the law and restricted to receive repayment of excessive interest rate.

Since the court ruling, borrowers gradually had been suing to reimburse excessive payment due to the Interest Rate Cap Law. The lump sum compensation was estimated as JPY 2.4 trillion at end of 2008.

Some proposed restrictions which the technology can be used may be following conditions:

• explained the way of gathering information and using it to users previously
• stopped to gather the information if users ask to reject it
• established proper structure to prevent information leaked  

The Japan Times reported it on the article on 15th May 2010 that it did not offer any specific steps toward a resolution.

Reacting with anger and disappointment, the plaintiffs renewed their accusation that the state failed to take steps for decades to avert the risks posed by shared needles during mass vaccinations.

The government made the announcement during discussions in a session for one of the hepatitis B lawsuits filed with the Sapporo District Court.

“We are now ready to sit down at the negotiating table,” a government representative said in court. “But no conclusion has been given on the scope of people subject to damages payments or their specific amounts. We hope to have appropriate settlement talks.”

In Tokyo, Health, Labor and Welfare Minister Akira Nagatsuma said in a statement, “We would like to faithfully deal with settlement talks and pursue a settlement that the people can understand and cooperate in.”

A string of similar lawsuits have been filed in 10 district courts by 420 hepatitis B sufferers and relatives of deceased patients.

Depending on the scope of the government relief package, it could be the largest compensation paid by the state for the suffering caused by infectious diseases, with as many as 1.4 million people believed to have been infected with the virus.

Despite the government vow to move forward, however, plaintiffs were skeptical.

“I wonder what the government has been doing in the past two months” since it informally decided to seek a court-brokered settlement, said Mieko Taniguchi, 60, who represents all groups of plaintiffs suing the state nationwide.

“I don’t feel any sense of urgency on the part of the government,” she said outside the Sapporo court. “How long will they keep us waiting?”

During Friday’s session, the court urged the government to offer specifics of its settlement offer before the next court session scheduled for June 21. A lawyer for the plaintiffs quoted the government representative as saying the state would not propose any specific relief package before early July.

Nagatsuma said in Tokyo the government has yet to decide on any specifics regarding its settlement offer.

A 2006 Supreme Court decision held the state responsible for the shared needles that caused the widespread infection, and ordered it to pay ¥5.5 million per sufferer in damages. However, the government’s relief package has failed to make progress since then.

The first of the pending hepatitis B damages suits was filed with the Sapporo court in March 2008.

The Sapporo and Fukuoka district courts recommended that the government launch settlement negotiations on these suits in March. On Sunday, Prime Minister Yukio Hatoyama agreed with Cabinet ministers to accept the recommendations.

The focus of the talks will be the amount of compensation the state will pay and the range of people who will be offered redress. But an early settlement may be difficult to reach due to the difference between what the plaintiffs and the state consider adequate compensation.

This thought should not have reality. Fundamentally, retail customers usually do not sufficient information to product or services concerned; moreover , by virtue of performing unfair commercial practices, many customers usually tend to depend on advice and solicitation available and have not enough competent to evaluate it sufficiently; the most important thing is that vigorous traders deprive the opportunity of considering to make erroneous economical decision and exploit customers’ interest, taking advantage of vulnerable position both knowledge and bargaining power in customers.

On the other hand, most rulings seem to pay attention to the issue. Whilst it accuse the unfair commercial practices and commiserate the weal position not to be able to resist the fraudulent or aggressive practice and approve the liability of traders, same ruling may point out the existence of occasion for victims no to make a contract.

Meanwhile, rulings to deny fault offsetting on customer’s side increasing gradually. In a lawsuits regarding dispute of commodity futures transaction, the Hiroshima District Court , on 14th May 2010,rejected the counter claim of fault offsetting by a trader. The court said as follows:

” If a victim seem to have fault by the viewpoint of third party side, it is not reasonable that the liability of offender should be reduced; it is necessary to take account of the relationship between a victim and a offender, considering whether the fault offsetting is justified. When the victim has fault, if the illegality of activity of offender is material, it shall accord the notion of fairness not to lessen the claim of damages.

In the case, it could not deny that there existed the easiness, recklessness and carelessness which contribute to be incurred and expanded in damages of the plaintiff after staring trade. However, the defendant employee performed their business conduct , breaching suitability rule, explanatory obligation, duty of care to new customer and obligation of preventing cross order; these practices was illegitimately as a whole and these should extremely serious, conducted intentionally; the state of illegality should be significant. Therefore, the defendant have not qualification to blame the fault of the plaintiff side. Moreover, as the defendant is in the position to protect a customer ‘s interest due diligence, the fault of the defendant should not take account in damage compensation, and it is suitable to the notion of fairness.”

Whilst it passed three years since the scheme established, the number of the certified consumer group still remain as only 9; there is no certified consume group in Tohoku, Shikoku and Kyushu district.

The number of action is also few, 7 cases. Why is it so few?  Most significant problem is a burden of litigation cost such as investigation and court charge. Total cost of taking action might be estimated as about 2 million yen. However, if the consumer group win the case, the group can not get compensation because the scheme only approve taking action of injunction, not damage compensation. Therefore, income of the group is limited by contribution or member’s fee.

Kyoto Consumer Contract Network, one of certificated consumer groups under the  collective action scheme, took 4 court actions so far; but legal fee of these lawsuits is undertaken by lawyers who participate the group or corporate the activity of the group.

In November 2004, the Consumer Supporting Fund was established. But the fund was only 30 million yen donated initially. If the fund will be consumed, activity of the fund shall be forced to be shut down.

In September 2009, the Establishing Law of Consumer Affairs Agency pledged to review supporting scheme to  consumer groups and take suitable action within 3 years.