December 28, 2020 Guidance to Fortune Co., Ltd. on Improper Solicitations without Specifying the Purpose of Soliciting MVNO Services

Improper solicitations were confirmed in sales agents for Fortune Co., Ltd. (headed by TAKAMI Toru, Representative Director), a telecommunications carrier that provides an MVNO service named My Mobile. The sales agents solicited the MVNO service without specifying the purpose of their solicitations by making telephone calls to consumers and explaining that they were making phone calls about a fixed-line telephone provided by a major telecommunications carrier or for confirming the frequency of consumers’ use of the telephone.
From the above, Fortune Co., Ltd. has found violations of the obligation to take measures, such as guidance for persons entrusted with intermediation, etc. stipulated in Article 27-4 of the Telecommunications Business Act (Act No. 86 of 1984) and other provisions of the Act. Accordingly, the Ministry of Internal Affairs and Communications (MIC) instructed Fortune Co., Ltd. to thoroughly comply with the law and refund the amount of money collected excessively from users.

1. Outline of the case and content of administrative guidance

• 1.
  MIC and other ministerial agencies concerned have been receiving many complaints regarding My Mobile (hereafter referred to as the “Service”). This is an MVNO service for consumers provided by Fortune Co., Ltd. (hereafter referred to as “Fortune”). Among them, many improper cases were pointed out. For example, MIC found that Fortune’s sales agents introduced themselves as a major telecommunications carrier or its distributor and made people misunderstand that they were being solicited by the major telecommunications carrier or its distributor.
• 2.

  Fortune outsourced the intermediary or agency business of concluding contracts on the provision of the Service and conducting related operations to persons entrusted with intermediation, i.e., sales agents (sole proprietors). These sole proprietors conducted business activities under the trade name of Prime and Clover. In response to MIC’s request, Fortune submitted a recording of the telemarketing they made, in which improper solicitations were found.

  • *
    It has been reported that Prime and Clover already canceled the mediation or agency business of concluding contracts on providing telecommunications services and conducting related operations.
• 3.
  Furthermore, MIC requested a report from Fortune to confirm Fortune’s legal compliance system. As a result, the following facts were confirmed:

  • Fortune entrusted Prime and Clover with business operations, such as intermediating contracts on the Service and related operations. Nevertheless, Fortune did not confirm Prime or Clover’s submission of the notification of mediation business as stipulated in Article 73-2, Paragraph 1 (Notification of Intermediation Operations) of the Telecommunications Business Act (hereafter referred to as the “Act”). No measures were taken to ensure compliance with this provision.
  • After explaining the provision conditions of the Service by telephone, neither Prime nor Clover delivered any explanatory documents specified by Article 22-2-3, Paragraph 3 of the Regulations for Enforcement of the Telecommunications Business Act (MPT Ordinance No. 25 of 1985; hereafter referred to as the “Regulations”).
• 4.

  These facts suggest that Fortune took no steps to ensure that the work Fortune outsourced to its sales agents was conducted properly and reliably. Therefore, Fortune was found to be in breach of Article 27-4 (Designation of a Person as a Designated Examination Body) of the Act.

• 5.

  In the contract document as specified in Article 26-2, Paragraph 1 (Delivery of Documents) of the Act, Fortune described an amount exceeding that specified in Article 22-2-9 of the Regulations. Fortune claimed this amount for users’ contract cancellation (initial contract cancellation) of the Service and other charges as stipulated in Article 26-3, Paragraph 1 (Written Cancellations) of the Act. Fortune claimed 15,000 yen and 10,000 yen from 168 users from September 9, 2019, through October 1, 2020, and from six users from October 2, 2020, through November 7, 2020, respectively. Therefore, Fortune’s violation of the provisions of Article 27-2, Item 1 (Prohibited Conduct of Telecommunications Carriers) of the Act was confirmed.

• 6.

  Furthermore, the contract mentioned above did not describe the method of calculating the amount to be paid by the user upon cancellation of the document as stipulated in Article 22-2-4, Paragraph 2, Item 2 of the Regulations. From this, Fortune’s violation of the provisions of Article 26-2, Paragraph 1 (Delivery of Documents) of the Act was confirmed.

• 7.

  Under these circumstances, MIC instructed Fortune to ensure compliance with the law and refund the amount of money collected excessively from the users.

2. About Fortune’s Solicitations

Fortune’s specific solicitation method starts with a phone call to users of optical lines provided by a major telecommunications carrier. Fortune makes the users cancel the optical lines and return them to analog lines. Then Fortune makes the users replace the analog lines with Fortune’s Service. It turned out that Fortune concluded contracts for its stationary router (MVNO) service called My Mobile. The detailed solicitation method is as follows:

• 1.
  Clover and Prime call a user in turn.
• 2.

  Clover gives guidance that leads to the user’s misunderstanding as if it is a confirmation of the usage status of the user’s optical line. Clover says, “We are contacting you about NTT’s landline phone. We are checking the usage status. It costs a lot of money to use the optical line provided by the major telecommunications carrier. However, if you do not watch videos on your PC, there is a way where the Internet can be used at a low cost.”

• 3.
  Next, Prime confirms the usage environment and finally informs that it will be a contract for My Mobile. A consumer should confirm the name of the telecommunications carrier that provides the target telecommunications service, the content of the service, and the rate (including cancellation and handling charges) if the consumer receives a solicitation for a telecommunications service. Be careful not to make an undesired contract.