August 20, 2020 Guidance to Never Stage on Improper Solicitation of ISP Service Misleading People to Believe It a Guide to Change Optical Line Operators

The Ministry of Internal Affairs and Communications (MIC) has today instructed Never Stage (a company headed by SATO Mikiya, Representative Director) to ensure its compliance with the Telecommunications Business Act (Act No. 86 of 1984). They were recognized to have violated the Act, including the provisions of Article 26, Paragraph 1, which stipulates obligations to explain the provision conditions of services. Regarding this matter, MIC confirmed that HSC Co., Ltd. and Venture Planning Co., Ltd., were their sales agents, to which MIC gave administrative guidance on June 18 of this year and opened the fact to the public.

1. Outline of the case and content of administrative guidance

• 1.
  Many complaints have been submitted to MIC and consumer service centers nationwide regarding Newnet* (hereafter referred to as “the service”), which is an ISP service provided to consumers by Never Stage. These complaints include many cases suspected to be inappropriate solicitations, including cases where they identified themselves as a major telecommunications carrier or its sales agents, and users were solicited in the misbelief that they were a major telecommunications carrier or its sales agents.

  • *
    An ISP service that Never Stage receives wholesale from i.com. and provides to consumers.
• 2.
  In response to the above consultations for complaints, MIC demanded a report from Never Stage to confirm the company’s legal compliance system. As a result, it turned out that Never Stage used a document that did not describe the necessary explanation items required by Article 26, Paragraph 1 (Explanation of Terms and Conditions for the Provision of Services) of the Telecommunications Business Act (Act No. 86 of 1984, hereafter referred to as “the Act”). From this, MIC recognized its violation of the provisions of this paragraph.
• 3.
  Of the complaints received for the service, MIC recognized that the telephone solicitation made by HSC Co., Ltd.*, a sales agent handling the service, violated the provisions of Article 27-2, Paragraph 2 (i.e., the prohibition of soliciting without telling the name or the fact of solicitation) of the Act.

  • *
    As of August 5 of this year, HSC Co., Ltd. submitted a notice of abolition of intermediary business, based on Article 73-2, Paragraph 4 of the Act.
• 4.
  Furthermore, MIC found that usage fees were claimed from those who refused contracts when they received door-to-door sales from the sales agents, even though there was no fact that the service was provided. This problem occurred as a result of the lack of proper coordination between Never Stage and its sales agents.
• 5.
  These actions were because Never Stage did not take the necessary steps to properly and reliably carry out the work entrusted to its distributors. This failure resulted in the violation of the provisions of Article 27-4 (Measures for Guidance for Intermediary Business Trustees) of the Act.
• 6.
  Under these circumstances, MIC has instructed Never Stage to comply with the law thoroughly.

Main contents of instructions to Never Stage

1. Thorough compliance with the provisions of Article 26, Paragraph 1 and Article 27-4 of the Act

Never Stage should thoroughly comply with the provisions of Article 26, Paragraph 1 (Explanation of Terms and Conditions for the Provision of Services), and Article 27-4 (Measures for Guidance for Intermediary Business Trustees) of the Act. Furthermore, Never Stage should take measures to ensure that its sales agents will thoroughly comply with the provisions of Article 27-2, Paragraph 2 (i.e., the prohibition of soliciting without telling the name or the fact of solicitation).

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 Never Stage provides, Never Stage should take recurrence prevention measures promptly based on the above guidance and report in writing to MIC by September 16, 2020. (The drafter’s note: The day after one month has elapsed from the date of publication of the document.)

2. Notice to call users’ attention

Recently, cases have been confirmed in which users signed contracts without their full awareness of services provided by service providers that utilized procedures for optical line or other service contract changes. The service providers gave the users the false impression that they were being solicited by major telecommunications carriers, such as East Nippon Telegraph and Telephone Corporation and West Nippon Telegraph and Telephone Corporation, or their distributors. For this reason, all telecommunications service users should confirm the name of the telecommunications carrier that provides the target telecommunications service and the content of the service when the telecommunications service is solicited. Please check the charges (including cancellation charges and commissions) and be careful not to conclude a contract you do not wish.

3. Reference

• Guidance to easplant and Its Sales Agent NLINK Co., Ltd. on Improper Solicitation of ISP Services Misleading People to Believe It a Guide to Change Optical Line Operators (2020/6/12)
• 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 (2020/6/18)