Business Opportunity Sales Transactions
Business Opportunity Sales Transactions are transactions in which a consumer is solicited on the grounds that "income will be gained through the job that will be offered," and made to buy and bear the cost of goods, etc., said to be necessary for the job.
"Business Opportunity Sales Transactions" subject to the Specified Commercial Transactions Act
１．"Business Opportunity Sales Transactions" subject to the Specified Commercial Transactions Act (Article 51 of the Act)
The Specified Commercial Transactions Act defines "Business Opportunity Sales Transactions" as follows:
- It is the business of the sale (including arranging the sale) of articles or the provision (including arranging for the provision) of services,
- wherein the possible receipt of a profit through engaging in business activities is used to induce the counterparty to enter transactions,
- and wherein transactions that involve a specified burden are carried out with the counterparty.
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The following are examples of Business Opportunity Sales Transactions:
- ・Work-from-home website building job using the purchased PC and computer software
- ・Servicing customers at exhibitions wearing the purchased Kimono
- ・Providing feedback as a monitor on using the purchased healthy bedding
- ・Distributing purchased leaflets
- ・Work-from-home data entry job using the skills gained by receiving a service, word-processor training
Control on Business Opportunity Sales Transactions
１．Clear Indication of Name (Article 51-2 of the Act)
When a person engaged in Business Opportunity Sales conducts Business Opportunity Sales Transactions, the following matters must be notified to the consumers prior to solicitation:
- The name of the person engaged in Business Opportunity Sales
- The fact that its purpose is to solicit the conclusion of a contract for transactions that involve a specific burden
- The type of goods or services connected with the solicitation
２．Prohibited Conduct (Article 52 of the Act)
The Specified Commercial Transactions Act prohibits unjust acts by a person engaged in Business Opportunity Sales Transactions, such as lying to, or intimidating to overwhelm, the counterparty of the transaction, during the solicitation for the conclusion of a contract or after the conclusion of the contract, to prevent the cancellation of the contract. Specifically, the following conduct is prohibited:
- Failure to disclose factual information, or misrepresentation of information, in soliciting the conclusion of a contract or after the conclusion of a contract, about the quality/performance of the goods, specified burden, conditions for canceling the contract, Business Opportunity Profit, or any other important matters, in order to prevent the cancellation of the contract.
- Intimidating to overwhelm a counterparty in soliciting the conclusion of a contract or after the conclusion of a contract, in order to prevent the cancellation of the contract.
- Soliciting a consumer, who was induced away by solicitation methods that do not inform the solicitation purpose (the same methods as so-called unscrupulous sales on the street, or appointment sales), to conclude a contract for Business Opportunity Sales Transactions, at a place other than places in which the general public comes and goes.
３．Indication of Advertisement (Article 53 of the Act）
The Specified Commercial Transactions Act obligates the indication of the following matters in advertisements of Business Opportunity Sales Transactions placed by a person engaged in Business Opportunity Sales.
- The type of goods (services)
- Information about the specified burden involved in the transaction
- Conditions under which the business activities are provided
- Name, address, telephone number of the person engaged in Business Opportunity Sales
- If the person engaged in Business Opportunity Sales is a juridical person, and a method using an electronic data processing system is used for advertising, the names of the person's representative or the person responsible for business activities related to Business Opportunity Sales.
- Name of the goods
- If a commercial advertisement is sent by e-mail, the e-mail address of the person engaged in Business Opportunity Sales.
４．Prohibition of Misleading Advertising (Article 54 of the Act)
With regard to matters to be indicated, the Specified Commercial Transactions Act prohibits an "indication that differs vastly from the truth" or an "indication that misleads people into believing that it is vastly better or more advantageous than it is in reality" in order to prevent consumer problems caused by misleading advertising, or advertisements which vastly differ from the truth.
５．Prohibition on Sending E-mail Advertising to a Person Who Has Not Given Consent (Article 54-3 of the Act)
In principle, a person engaging in Business Opportunity Sales is prohibited from sending e-mail advertising on Business Opportunity Sales Transactions unless the consumer gave consent in advance. (Opt-in regulation)
This regulation is not only for a person engaging in Business Opportunity Sales, but also for business operators entrusted with e-mail that advertises Business Opportunity Sales Transactions. Therefore, if consent to, or a request for the provision of the e-mail advertising was received from a consumer, it is necessary to keep a record of the consent or the request for three years from the date when the last e-mail advertising was sent. The controls do not apply to the following cases.
- 1) Advertisements accompanying "conclusion of contract," "confirmation of order," "notification of shipment," etc.
- These are advertisements included as part of an e-mail making notification of "important items" such as notifications related to the contents or performance of the contract.
- 2) Advertisements accompanying mail magazines
- These are advertisements included as part of the e-mail advertising which is sent with the request or consent of the consumer.
- 3) Advertisements accompanying free e-mail
- These are advertisements included as part of the e-mail sent from an e-mail account created for free on the Internet using a service in which a free e-mail account is given on the condition that advertisements will be automatically included in every email sent from that account.
６．Delivery of Documents ( Article 55 of the Act)
When concluding a contract relating to Business Opportunity Sales Transactions, a person engaging in Business Opportunity Sales must deliver the following documents to the consumer.
- A. Prior to the conclusion of a contract, a document containing an outline of the Business Opportunity Sales (outline document) must be delivered.
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The Act provides that the following items must be described in the "outline document":
- Name, address, and telephone number of the person engaging in Business Opportunity Sales, and the name of the representative in the case of a juridical person
- Important information about the type, the performance, and the quality of the goods (type of rights or services, and important information about their contents)
- Name of the goods
- Important information about the conditions under which the business activities that use the goods (or services to be provided) are provided (or arranged to be provided)
- Contents of specified burden
- Conditions for canceling a contract and other important information about the contract
- Information about the right to assert an affirmative defense against credit companies under the Installment Sales Act
- B.Upon the conclusion of the contract, a document clarifying the contents of the contract (contract document) must be delivered without delay.
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The Act provides that the following matters must be described in the "contract document."
- Information about the type, the performance, and the quality of the goods (type of rights or services, and matters concerning their contents)
- Important information about the conditions under which the business activities that use the goods (or service to be provided) are provided (or arranged to be provided)
- Information about specific burden
- Information about the cancellation of Business Opportunity Sales Contracts
- Name, address, and telephone number of the person engaging in Business Opportunity Sales, and the name of the representative in the case of a juridical person
- Name of the person in charge of the conclusion of that contract
- Date of the contract
- Name, brand name, or manufacturer's name of the goods
- If there are provisions about obligations other than the specified burden, the details of such provisions
- Information about the right to assert an affirmative defense against credit companies under the Installment Sales Act
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- In addition, a note for consumers to the effect that documents should be carefully read must be written in red and circled with red. The information about cooling-off must also be written in red and circled with red in the contract document. Moreover, the font size on documents needs to be 8 points or more (the font size in the official gazette).
７．Administrative Dispositions and Penalties
A person who violated the above administrative controls becomes subject to penalties in addition to administrative disposition such as an instruction of business improvement (Article 56 of the Act), or a business suspension order (Article 57 of the Act).
８．Cancellation of a Contract (Cooling-off System) (Article 58 of the Act)
Even if a consumer concluded a contract in a Business Opportunity Sales Transaction, the consumer may cancel the contract (cooling-off) by writing to the person engaging in Business Opportunity Sales within 20 days after receiving the documents specified in laws.
It should be noted that a consumer may execute cooling-off even after the above period has passed for a contract concluded on or after November 11, 2004 if the consumer misunderstood cooling-off, or was overwhelmed so as not to execute cooling-off because of the misrepresentation or the use of intimidation by the person engaging in Business Opportunity Sales. (The use of certified mail, registered mail, content-certified mail, etc., is recommended for cooling-off in order to avoid future problems.)
Also note that in this case, the business operator cannot claim damages or the payment of penalties for breach of contract, and the costs for returning the goods must be borne by the business operator. However, both parties canceling the contract share the obligation to restore the site to its original condition. The business operator must return the payments and transaction fees it received, and the consumer must return the delivered goods to the business operator.
９．Rescission of the Manifested Intention to Offer a Contract or to Accept Such Offer (Article 58-2 of the Act)
If a consumer manifested the intention to offer a contract or to accept such offer under the misunderstanding in each of the following cases as a result of the following acts of the person engaging in Business Opportunity Sales in soliciting the conclusion of the contract, the consumer may rescind the manifested intention for contracts concluded on or after November 11, 2004.
- In the case of misrepresentation, the misunderstanding that the information being represented was true
- In the case of intentional failure to disclose factual information, the misunderstanding that the relevant facts did not exist
１０．Limitation to the Amount of Damages for the Cancellation of a Contract (Article 58-3 of the Act)
The Specified Commercial Transactions Act specifies that a business operator cannot claim an amount exceeding the following amounts so that the business operator won't be able to claim unreasonable damages when the contract is canceled for the reason of a consumer's default, e.g., delay of payment, after the cooling-off period has passed.
- When the goods are returned, the amount of the ordinary usage fees (if the amount obtained by subtracting the possible reselling price from the selling price exceeds the ordinary usage fees, such amount)
- When the goods are not returned, the amount equivalent to the selling price
- When the services are already provided, the amount equivalent to the consideration for the provided services
- When the goods (rights) are not delivered yet (or when the services are not provided yet), the amount of costs normally required for concluding and performing a contract
The delinquency charges based on the statutory interest rate of 6% per year is added to these amounts.
１１．Demand for Injunction against Business Operator's Conduct (Article 58-23 of the Act)
If a person engaging in Business Opportunity Sales has performed, or is likely to perform any of the following acts to many and unspecified persons, a Qualified Consumer Organization may demand that the business operator discontinue or prevent the relevant conduct, or take any other necessary measures.
- Misrepresentation or intentional failure to disclose factual information in soliciting the conclusion of a contract
- Intimidation to overwhelm a person to conclude a contract, or to prevent its cancellation
- Indication of misleading advertisements
- Solicitation for the conclusion of a contract by providing conclusive evaluations that would likely cause a person to mistakenly believe that the Business Opportunity Sales Transactions are sure to generate a profit
- Act of concluding a contract that includes special provisions which are disadvantageous to consumers, or special provisions against the limitation of the amount of damages for the cancellation of a contract
