Fraudulent and malicious sales methods victimizing innocent people have become a social issue. In a typical case, the Tokyo Metropolitan Police Department arrested four former salesmen last month on suspicion of having cajoled or pressured some 5,400 people in 34 prefectures into signing contracts for housing renovation in the past three years. The amount of sales attributed to coercive methods used by the suspects was estimated to have reached 14 billion yen. Most of the victims were elderly people living alone or suffering from senile dementia.

To protect consumers against such crimes, the government is proposing an epoch-making bill based on a report written by the Quality of Life Council of the Cabinet Office. The bill, to be submitted to the ordinary Diet session in 2006, would enable consumer organizations to seek an injunction against a questionable sales method or contract on behalf of people who have actually suffered damage. Revising the Consumer Contract Law so that a third party can file such a lawsuit is a first in the nation’s legal practices and represents an important step toward rescuing consumers from malicious salespeople.

Only consumer organizations that have been authorized by the Cabinet Office would be able to file the lawsuit. The main criteria will be that they have corporate status, lawyers and a history of activities aimed at protecting consumers, and operate independently of business interests.

At present, all that consumers and consumer organizations can do is file requests with the companies concerned or the municipal governments in which they operate. The bill would give consumers and consumer organizations an effective legal weapon. They would be able to confront salespeople and companies with a stronger position, including warnings that they would go to court if rectification measures were not taken. If the salespeople and companies failed to respect a court decision in favor of consumers, state authority could be invoked to implement the decision.

Under existing provisions of the Consumer Contract Law, a consumer may cancel a contract that has been signed as a result of malicious and questionable sales methods, but the revised law is designed to serve as a stronger deterrent to malicious salespeople and companies.

In fiscal 2004, the National Consumer Affairs Center of Japan, an independent administrative body, and the consumer-life centers of municipal and prefectural governments received about 1.78 million complaints or requests for advice — double the corresponding number in fiscal 2002.

About 80 percent of the cases brought to the attention of these centers concerned sales conducted over the telephone or during visits to homes in which consumers were deceived into buying unnecessary items or coerced into paying exorbitant penalties for canceling contracts.

The following are examples of the types of contracts and sales tactics that would be targeted by lawsuits allowed under the bill: refusing to leave a prospective customer’s home, or refusing to let a prospective customer leave (confinement); luring a prospective customer to buy a financial instrument without guaranteed capital with statements that the value of the instrument will go up without fail; giving false information concerning important clauses of a contract; and preparing a contract that calls for an unreasonably high cancellation penalty, exempts the company from the duty of paying a compensation, or contains clauses that run counter to recognized principles of good faith.

Some well-meaning enterprises have started contributing money to establish funds to help consumer organizations in filing lawsuits under the bill. Such a move will help not only raise people’s and the business community’s awareness about the problems stemming from questionable sales methods and contracts but also build up social pressure against companies ready to use such business methods.

While consumers and consumer organizations would be able to stop unreasonable contracts or sales methods through lawsuits under the bill, lawsuits aimed at seeking compensation for damage caused by such contracts or sales methods are not provided for under the revision bill.

The report by the Quality of Life Council says the lawsuits should be filed in areas where the head offices of the companies concerned are located. The government should make further efforts to make the revision bill reasonable from legal and practical viewpoints and, at the same time, as friendly as possible for consumers and consumer organizations that may happen to resort to lawsuits in their conflicts with fraudulent businesses.

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