June 18, 2020 Guidance to Criumph and Its Sales Agents HSC and Venture Planning on Improper Solicitation of ISP Services Misleading People to Believe It a Guide to Change Optical Line Operators

The Ministry of Internal Affairs and Communications (MIC) has today instructed Criumph (a company headed by Shoya Honda, Representative Director) and its sales agents HSC (a company headed by Tatsunori Ashida, Representative Director) and Venture Planning (a company headed by Tatsuya Kamata, Representative Director) to ensure their compliance with the Telecommunications Business Act (Act No. 86 of 1984). They were recognized to have violated Article 27-2, Paragraph 2 of the Act, which prohibits solicitation without telling the fact of their solicitation, their names, and other identities.

1. Outline of the case and content of administrative guidance

• 1.

  Many complaints have been submitted to MIC and consumer service centers nationwide regarding the Startnet* (hereafter referred to as “the service”), which is an ISP service provided to consumers by Criumph. These complaints include many cases suspected to be inappropriate solicitations, including the following cases:

  • *
    An ISP service that Criumph receives wholesale from i.com. and provides to consumers.
• 2.
  Of the complaints received for the service, MIC recognized that the telephone solicitation made by HSC and Venture Planning, both of which are sales agents handling the service, violated the provisions of Article 27-2, Paragraph 1 (i.e., the prohibition of misrepresentation) and Paragraph 2 (i.e., the prohibition of soliciting without telling the name or the fact of solicitation) of the Telecommunications Business Act (hereafter referred to as “the Act”).
• 3.
  MIC found that employees of Criumph’s sales agents made door-to-door sales with a handwritten memo as an aid to the explanation of this service to users read “HSC as Company X’s primary agency.” However, Company X was not in a relationship to conclude an agency contract with Criumph or their sales agents. From this, it turned out that the employees of the sales agents were giving false information to the users in violation of the provisions of Article 27-2, Paragraph 1 (i.e., the prohibition of misrepresentation).
• 4.
  MIC found that they used a document that did not contain basic explanation items prescribed in Article 26 (Explanation of Terms and Conditions for the Provision of Services). From this, MIC recognized their violation of the provisions of the same article.
• 5.

  Furthermore, MIC found the following facts:

  • A document concerning the procedure of operations for the sales agents created by Criumph stated that the sales agents before solicitation should introduce the content of the service without giving the name of the telecommunications carrier providing the telecommunications service.
  • Criumph left their sales agents that made door-to-door sales to handle complaints about their door-to-door sales. As a result, even though users applied to the sales agent to cancel the service, the cancellation process was interrupted, and the cancellation procedure was not completed over one month after the cancellation application was submitted. These facts indicate that Criumph did not properly and promptly process complaints and inquiries from users and that no measures were taken to properly and reliably conduct the work entrusted to the sales agents. Therefore, MIC recognized that their deeds violated the provisions of Article 27 of the Act (Procedure for Processing Complaints) and Article 27-4 of the Act (Measures for Guidance for Intermediary Business Trustees).
• 6.

  From these circumstances, MIC instructed Criumphm, HSC, and Venture Planning to ensure thorough compliance with the law.

  Main content of instructions for Criumph

  • 1.
    Thorough compliance with the provisions of Article 26, Article 27, Article 27-2, Paragraph 1 and Paragraph 2, and Article 27-4 of the Act
    That is, Article 26 (Explanation of Terms and Conditions for the Provision of Services), Article 27 (Procedure for Processing Complaints), Article 27-2, Paragraph 1 (i.e., the prohibition of misrepresentation) and Paragraph 2 (i.e., the prohibition of soliciting without telling the name or the fact of solicitation), and Article 27-4 (Measures for Guidance for Intermediary Business Trustees).
  • 2.
    Report on the implementation of recurrence prevention measures
    For the prevention of such improper cases from occurring in the future in the telecommunications service that Criumph provides, Criumph should take recurrence prevention measures promptly based on the above guidance and report in writing to MIC by July 15, 2020.

2．Notice to call users’ attention

Regarding optical line services sold wholesale by Nippon Telegraph and Telephone East Corporation or Nippon Telegraph and Telephone West Corporation (hereafter referred to as NTT East/West), a procedure for business operator changes started on July 1, 2019. This procedure enables users to change business operators (hereafter referred to as “optical collaboration operators”) that provide the users with optical line services purchased at wholesale from NTT East/West. Accordingly, users can choose other optical collaborative operators or NTT East/West.
Recently, MIC confirmed the following solicitation method of Criumph and their sales agents HSC and Venture Planning for their service.

• 1.
  They conduct solicitation over the phone and contact users who have contracts with optical collaboration operators. They announce that it is a guide for ISP services. Immediately afterward, they pretend to be giving optical line information. They provide information on optical line charges, saying that the users’ charges would be suppressed by taking the procedure for business operator changes and changing the optical line service provided by NTT East/West.
• 2.
  After the users agree to business operator changes for the optical line service, they tell users that the users need a separate ISP service contract and explain their service. Then they tell the users that they will take a detailed procedure for changing operators and make settings related to the service at the time of their visit and engage to visit the users.
• 3.
  When they visit, they show the procedure for business operator changes (procedure related to contacting users’ optical collaboration operators currently under contract and NTT East/West) and make settings for the service.

Due to this solicitation method, the users misunderstand that a major telecommunications carrier, such as NTT East/West Japan, has made the solicitation. As a result, MIC has been receiving many complaints from users saying that they have signed ISP service contracts with companies, of which the users do not know.

MIC and consumer service centers are receiving complaints and consultations about telecommunications carriers who use the same solicitation method, besides Criumph. If telecommunications service users receive a solicitation for telecommunications services, be sure to confirm the name of the telecommunications carrier who provides the telecommunications services. Be careful not to sign a contract you do not want.