Punishments for mislabeling

At long last, the Consumer Affairs Agency has decided to introduce a system to impose monetary penalties on companies that mislabel their food products.

Last year, hotels, department stores and other companies were caught in a web of false labeling scandals. Those scandals pushed the government, after public outcry, to investigate. After further debate, a system of punishment is at last being set up.

No one knows quite how long the food mislabeling has been going on. Since the agency was launched in 2009, consumer affairs centers nationwide have received around 57,000 inquiries concerning problems. Perhaps Japanese consumers are not so passive and acquiescent as thought; they just never had an agency on their side before. They need a stronger agency, however. Despite the high number of inquiries, an order to desist in false labeling has only been issued in 138 cases.

Until now, there has been no serious system of punishment. Basically companies that mislabel their food have been let off with a warning in hopes they will change. The new system will remedy that.

While the proposal has the potential to levy penalties of up to ¥300 million against violators of the Law against Unjustifiable Premiums and Misleading Representations, which covers false labeling, another part of the proposal suggests that companies can deduct the cost of refunds to consumers from their penalties. That deduction should not be allowed since it amounts to what tax accountants would call expenses incurred. Disreputable companies might simply factor in such refunds and fines as a cost of doing business.

The deduction should not be included in the proposal and the fines for mislabeling should be strengthened. Plans to set the penalty at 3 percent of the sales figures of mislabeled products is also far below any punitive standard. That’s less than the sales tax.

There is no need to bankrupt the companies for mistakes, but consumers need more protection than that. The new system should also impose heavier fines on repeat violators.

It might be hard to sympathize with a customer at a high-end hotel restaurant who pays for the most expensive shrimp but is given a similar but less costly variety, as happened at a hotel chain last year. But the law also protects consumers against other more serious cases of product mislabeling. False representation of products certainly cheats consumers out of their hard-earned money, but it could also seriously damage health.

Companies need to know that misleading consumers will hit them at the bottom line — their profits. The new system should not be a way for companies to apologize and save face, but rather a serious deterrent to mislabeling. Consumers deserve an agency and a system that protect their interests, their health and their finances.