Future Measures against Violations under the Act against Unjustifiable Premiums and Misleading Representations (the “Act”)
Including Introduction of a Surcharge System, Etc. in Order to Ensure the Effectiveness of Regulations overMisleading Representations under the Act (Replies to the Consultation) [Summary]June 2014, Consumer Commission

Points of issue, etc.

Replies to the Consultation

1. Need for introduction of asurcharge system○ It is highly necessary to introduce a surcharge system to impose economic
disadvantage on violators and discourage their incentives for the violations.

2. Purport and purpose of thesystem○ To deter misleading representations in advance in order to protect consumer
benefit.

3. Surchargeable cases(1) Surchargeable acts

○ Representation of the better quality and the representation of the advantageous
quality should be surchargeable.
○ It is unnecessary to consider representation designated by public notice to besurchargeable under the present circumstances.
○ A surcharge should be imposed on the representation regulated as unproved
advertisement unless the business operator submits reasonable supporting materials,
and it is advisable to establish the procedural provisions setting forth that the entity
undergoing punishment can challenge the imposition of the surcharge by producing
reasonable supporting materials in the subsequent litigation to establish that therepresentation at issue is not misleading.

(2) Subjective factors○ A surcharge will be imposed, in principle, on any misleading representation. If
the violator who did not intentionally make the misleading representation
presents any reasonable counterevidence that it had exercised the certain
duty of care, it would be exceptionally refrain from imposing a surcharge.

(3) Criteria based on size

○ A certain cutback is necessary.

(4) Statutory exclusive period○ There should be a certain reasonable period of time.

4. Calculation of surcharge amounts(1) Basic concept○ A surcharge should be calculated based on the amount equal to unfair profits
earned by the relevant business operator, which should also be calculated,without exception, using a certain formula.

(2) Addition to the surcharge,
subtraction from thesurcharge or exemption of
the surcharge○ In designing the system, additions should be considered in parallel withverification of whether it is necessary.
○ Subtraction from the surcharge or exemption of the surcharge also deservesconsideration.

(3) Applicable period○ Should be restricted to a certain reasonable period of time.

5. Whether or not theadministrative authorities shouldhave discretionary power○ The system should not be designed in such a way that the administrative
authorities may have the discretion.

6. Procedure for impositionof a surcharge○ Should consider any similar procedural security to that under the cease anddesist order.
○ The collection procedure should be designed in accordance with the existing
surcharge systems.

7. Future measures fordamage recovery○ The mechanism for promoting consumer damage recovery should be introduced.
○ A system should be adopted in such a way that a certain amount will be deducted fromthe surcharge amount, taking voluntary actions taken by the violator, such as
reimbursement to consumers.
○ “Voluntary action” should basically take the form of reimbursement to consumers whohave purchased the subject products and services.
○ Although a donation mechanism should be permitted to supplement reimbursement,
the purpose of use of donation should be defined in a limited extent, in part because
the deduction system is structured to promote consumer damage recovery.