April 27, 2020 Guidance to Line Select Kabushiki Kaisha and Its Dealers regarding Violation of Prohibiting Solicitations without Giving Their Names

The Ministry of Internal Affairs and Communications (MIC) found that Line Select Kabushiki Kaisha (headed by Representative Director Toshiyuki Hane) violated Article 27-2 (i) of the Telecommunications Business Act (Act No. 86 of 1984), which specifies certain disciplines, including the prohibition of misrepresentation and solicitations without giving their names. Accordingly, MIC has today instructed the company to ensure compliance with the Act.

1. Case overview

The Act on Partial Amendments to the Telecommunications Business Act (Act No. 5 of 2019) came into effect on October 1, 2019, which revised the previous Telecommunications Business Act. Accordingly, Article 27-2 (ii) of the revised Telecommunications Business Act (hereafter referred to as “the Act”) stipulates the prohibition of solicitations without telling the solicitors’ names or without notice of solicitations. Under the above provisions, telecommunications carriers or their dealers shall not make solicitations without telling their names before soliciting the conclusion of contracts relating to the provision of telecommunications services. (That is, the dealers shall tell the names of the telecommunications carriers that provide telecommunications services related to the solicitations as well as the names of the dealers if the dealers make solicitations).
Line Select Kabushiki Kaisha (hereafter referred to as “Line Select”) offers FTTH services Energy Hikari and Energy Hikari Plus (^*) (hereafter referred to as “the services”) to consumers. MIC confirmed that Line Select conducted solicitations in violation of the provisions of Article 27-2 (ii) of the Act (prohibiting solicitations without giving their names) and other provisions of the Act.

• *
  Energy Hikari is an optical line service that Line Select receives wholesale from Sony Network Communications Inc. and provides it to consumers.

Energy Hikari Plus is an optical line service that Line Select offers to consumers after receiving wholesale from a telecommunications carrier, which receives wholesale from Sony Network Communications Inc.

2. Outline of case and contents of administrative guidance

• 1.
  MIC and Consumer Affairs Centers nationwide have received many complaints and consultations regarding the services that Line Select offers to consumers. Many cases were suspected to be inappropriate solicitations. These solicitations included a case of dealers introducing themselves to users as if they belonged to a major telecommunications carrier or its sales agent that the users had a contract with. The dealers misled the users by inferring that the solicitation was by the telecommunications carrier or its sales agent.
• 2.
  With consideration of the above complaint consultation, MIC checked the telephone solicitations that caused the complaints about the services.
  MIC confirmed that Line Select and its dealers’ deeds violated the provisions of Article 26 (Explanation of Terms and Conditions for the Provision of Services) of the Act. MIC also confirmed that the provisions of Article 27-2 (i) (prohibiting solicitations without giving their names) (ii) (prohibiting solicitations without giving their names).
• 3.
  Also, MIC confirmed the existence of a document prepared by Line Select on the procedures of operations for dealers, which included a description to introduce the contents of the services to users without telling the name of the telecommunications carrier that provides the telecommunications service before their solicitation. From this description, it was clear that Line Select intentionally gave instructions in violation of the provisions of the Article 27-4 (stipulating obligation to take measures, such as instructions to dealers).
• 4.
  Furthermore, MIC confirmed from an arbitrary report of Line Select that the reception rate of telephone calls at its consultation desk on the services was extremely low. From this, MIC recognized that Line Select did not properly or promptly respond to complaints or inquiries about its telecommunications services or business methods, and found that Line Select violated the provisions of Article 27 (Procedure for Processing Complaints) of the Act.
• 5.

  Under these circumstances, MIC has instructed Line Select and its dealers that were found to have made inappropriate solicitations to ensure thorough compliance with the Act.
  (Main contents of administrative guidance to Line Select)

  • 1.

    Thorough compliance with Article 26, Article 27, Article 27-2 (i) and (ii), and Article 27-4 of the Act To comply thoroughly with the provisions of Article 26 (Explanation of Terms and Conditions for the Provision of Services), Article 27(Procedure for Processing Complaints), Article 27-2 (ii) (prohibiting misrepresentation) and (ii) (prohibiting solicitations without giving their names), and Article 27-4 (stipulating obligation to take measures, such as instructions to dealers).
    In this regard, Line Select must thoroughly refer to the Guidelines for Consumer Protection Rules for the Telecommunications Business Act of March 2016 (Final revision of March 2020) and the FY2018 Monitoring (Evaluation and Assessment) of Implementation Status of Consumer Protection Rules and pay particular attention to the following items.

    • It violates the provisions of Article 26 of the Act not to outline the provision conditions that consumers should at least understand.
    • It violates the provisions of Article 27-2 (i) of the Act to misrepresent important matters relating to contracts that may affect the judgment of users.
    • It violates the provisions of Article 27-2 (ii) of the Act to make a solicitation without telling their names before the solicitation or making a solicitation without notice.
  • 2.
    Implementation of recurrence prevention measures and reporting of implementation status Line Select must promptly take recurrence prevention measures based on the above guidance, and inform MIC of the contents of the recurrence prevention measures in writing to prevent such inappropriate cases from occurring in the future in telecommunications services provided by Line Select.