Telemarketing Sales are transactions in which a business operator solicits an individual and receives an offer by telephone. It is applicable to cases in which a consumer makes an offer via postal mail or by telephone after hanging up the phone.
"Telemarketing Sales" subject to the Specified Commercial Transactions Act
１．Sales Form (Article 2 of the Act)
The term "Telemarketing Sales" means the sale of goods or rights or the provision of services for which a seller or a service provider (*1) telephoned a consumer or caused a consumer to telephone by a specified means, during which telephone call the seller or the service provider solicited the consumer, and as a result received an offer for a sales contract or a service contract from the solicited consumer, or concluded such contracts with the consumer, by "postal mail, etc."(*2).
Telemarketing Sales includes not only the cases where a business operator receives an offer from (or concluded a contract with) the consumer during the same phone call that was made to solicit the consumer, but also the cases where a business operator receives an offer from the consumer by postal mail or phone call after hanging up the solicitation phone call, as far as the consumer made the purchase decision because of the solicitation phone call.
In addition, if a business operator delusively causes a consumer to call, and solicits the consumer during such phone call, it will also fall under "Telemarketing Sales." Cabinet Order defines such delusive behavior as follows:
- (1) To request that a consumer call without notifying that the purpose is to solicit the conclusion of a sales contract.
- (2) To request that a consumer call, saying that the consumer is eligible to conclude a sales contract with much more advantageous conditions than other people.
(※１) "A seller or a service provider" means persons engaging in the sale of goods or the provision of services as a business. "Engaging as a business" means that transactions are performed repeatedly and continuously with the intention of making a profit. It should be noted that the existence of such intention will be objectively judged regardless of the person's intention.
(※２) "Postal Mail, etc." includes any postal mail or correspondence delivery; methods using telephone, facsimile, or other communication devices or devices used for information processing; telegram; or payment to a deposit or savings account.
The term "Designated Rights" means, among the rights to use facilities or to receive services, those which are sold in transactions related to the daily lives of citizens, and which are specified by Cabinet Order.
The provisions regarding Door-to-Door Sales, Mail Order Sales, and Telemarketing Sales in the Specified Commercial Transactions Act apply to all goods, services, and rights in principle.
Remember that for certain designated consumable goods, consumers are not allowed to exercise their "cooling-off" rights once they are used.
３．Exclusion from Application (Article 26 of the Act)
The following cases are not subject to the Specified Commercial Transactions Act.
- Transactions between business operators
- Contract with a person living overseas
- Sales or provision of services by the national or local governments
- Sales or provision of services by a partnership established based on a special law, an employee organization of government employees, or a labor union, to their respective members
- Sales or provision of services by a business operator to its employees
- Sales of newspapers issued by those otherentities other than publicly listed companies
- Those for which it is found that consumer interests can be protected by other laws and regulations
Control on Telemarketing Sales
１．Clear Indication of the Name of the Business Operator (Article 16 of the Act)
When a business operator conducts Telemarketing Sales, the following items must be notified to the consumer prior to solicitation:
- Name of the business operator
- Name of the person who conducts solicitation
- Type of goods (rights, services) to be sold
- The fact that its purpose is to solicit the conclusion of a contract
２．Prohibition of Re-Solicitation (Article 17 of the Act)
The Specified Commercial Transactions Act prohibits business operators from continuing the solicitation or conducting re-solicitation with a person who has manifested the intention not to conclude a contract, etc. during the initial telephone solicitation.
３．Delivery of Documents (Article 18 of the Act, Article 19 of the Act)
The Specified Commercial Transactions Act specifies that, when a seller or a service provider receives an offer for a contract or concludes a contract, a document indicating the followings matters must be delivered to the consumer.
- Type of the goods (rights, services)
- Selling price (consideration for the services)
- Timing and means of paying the charges (consideration)
- The time at which the goods will be delivered (the time at which the rights will be transferred, or the time at which the services will be provided)
- Information about withdrawal of the offer for the contract (cancellation of the contract) (In case there is any partial exemption from cooling-off, a notice to that effect must also be included)
- Name, address, and telephone number of the business operator, and the name of the representative in the case of a juridical person
- Name of the person in charge of the conclusion of the contract
- Date of the conclusion of the contract
- Name, brand name, or manufacturer's name of the goods
- Model type of the goods
- Quantity of the goods
- If there are provisions about the responsibility of sellers for the case where goods have latent defects (defect which is not perceptible at first glance), the details of such provisions
- If there are provisions about the cancellation of a contract, the details of such provisions
- If there are other special provisions, the details of such provisions
- 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. Moreover, the font size on documents must be 8 points or more (the font size in the official gazette).
４．Notification of Acceptance in Prepaid Telemarketing Sales (Article 20 of the Act)
In the case of "Prepaid" Telemarketing Sales in which the charges (consideration) are paid in whole or in part prior to the delivery of the goods (the transfer of the rights, the provision of the services) to a consumer, a business operator must deliver a document that describes the acceptance or non-acceptance of the offer and other matters listed below, if the business operator cannot deliver the goods without delay after receiving the charges.
- The acceptance or non-acceptance of the offer (if the business operator does not accept the offer, business operator must clarify that the received money will be immediately refunded, and how the money will be refunded.)
- If the acceptance or non-acceptance of the offer was notified before receiving the charges (consideration), a notice to that effect.
- Name, address, and telephone number of the business operator
- The amount of received money (if any money has been received previously, the total amount)
- Date on which the money was received
- Goods for which the offer was received, and their quantity (types of rights and services)
- If the offer is accepted, the time at which the goods will be delivered (time at which the rights will be transferred, or the time at which the services will be provided) (a specific period or deadline must be given)
５．Prohibited Conduct (Article 21 of the Act)
The Specified Commercial Transactions Act prohibits the following unjust acts in Telemarketing Sales.
- Misrepresentation in soliciting the conclusion of sales contracts, or after the conclusion of such contracts, to prevent the withdrawal of an offer for the contract (cancellation of the contract)
- Intentional failure to disclose factual information in soliciting the conclusion of sales contracts, or after the conclusion of such contracts, to prevent the withdrawal of an offer for the contract (cancellation of the contract)
- Intimidation to overwhelm a counterparty in order to conclude a sales contract, or to prevent the withdrawal of an offer for the contract (cancellation of the contract)
６．Administrative Dispositions and Penalties
A business operator who violated the above administrative controls becomes subject to penalties in addition to administrative disposition such as an instruction of business improvement (Article 22 of the Act), or a business suspension order (Article 23 of the Act).
７．Withdrawal of an Offer for or Cancellation of a Contract (Cooling-off System) (Article 24 of the Act)
Even if a consumer made an offer for a contract, or concluded a contract in Telemarketing, the consumer may withdraw the offer or cancel the contract (cooling-off) by writing to the business operator within 8 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 business operator's misrepresentation about cooling-off matters or the use of intimidation. (The use of certified mail, registered mail, content-certified mail, etc., is recommended for cooling-off in order to avoid future problems.)
If the consumer has already received goods or rights at the time of cooling-off, the goods or the rights may be returned to the seller at the seller's expense. Moreover, even if the services were already provided, consumers do not need to pay the consideration for them. Consumers do not need to pay compensation for damages or penalties either, and if the consumer has already paid a consideration such as a deposit, the paid amount will be immediately returned, or if the state of the land, building, or any other structure has already been changed, they can be returned to its original state at no charge.
However, cooling-off provisions do not apply to the cases where the goods for which the value is almost lost by usage, so-called consumables (e.g., health foods, cosmetics, etc.), were used, or to the cases where the transaction is made by cash and the total amount of charges or consideration is less than 3000 yen.
８．Rescission of the Manifested Intention to Offer a Contract or to Accept Such Offer (Article 24-2 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 business operator 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
９．Limitation to the Amount of Damages for the Cancellation of a Contract (Article 25 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 (rights) 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 (rights) 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.
１０．Demand for Injunction against Business Operator's Conduct (Article 58-20 of the Act)
If a business operator 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 in soliciting the conclusion of a contract
- 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
- 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