• Kyodo News


A system comes into force Thursday that allows consumer groups to file lawsuits on behalf of individuals to stop fraudulent sales and other illegal practices.

The changes to the consumer contracts law were passed in response to an increase in fraud targeting the elderly, and experts say they should help in preventing fraudulent practices from becoming widespread.

However, the new system does not allow consumer groups to initiate lawsuits seeking damages on behalf of consumers. Opposition from business organizations, which raised the specter of frivolous litigation, prevented the revisions from including provisions for consumer class-action suits.

Countries in Europe, including Germany and France, allow consumer groups to launch damages suits on behalf of individual consumers.

Here, consumer groups will have to qualify with the Cabinet Office before they can file suits on behalf of consumers. Nearly 10 groups nationwide are planning to obtain the qualification.

Because the procedure is expected to take some time, the first suit from a consumer group is not expected until August or later, according to the Cabinet Office.

Specific practices subject to elimination under the consumer group suit system are likely to include illegal consumer contract provisions and utilization of erroneous information for soliciting financial products.

The system could also be used for solving disputes over refunds from canceled contracts with schools and landlords.

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