Author: Masatoshi Tanaka, Attorney at Law

【Administrative Order Regarding Affiliate Stealth Marketing (sutema) as a Misleading Representation】

There are many advertisements emphasizing products and services for the (good) effects of breast augmentation, dieting, beauty treatments, increase in health, etc..

On November 9, 2021, the Consumer Affairs Agency issued an “administrative order” against Aqugarage, Inc., and Assist Co., Ltd., under the Unjustifiable Premiums and Misleading Representations Act, for indicating that breast augmentation could occur only from drinking the product. As a result, the company needed to undertake measures based on the order such as making consumers aware that the product of the company was illegal under the Unjustifiable Premiums and Misleading Representations Act as falling under a misleading indication, and taking measures, etc., to prevent a reoccurrence of the incident.

An administrative order from the Consumer Affairs Agency regarding this kind of advertisement is not rare, and during recent few years about 50 administrative orders are issued by the Consumer Affairs Agency, and other agencies. However, the point that should be noted in this case is that the so-called method of “stealth marketing” (sutema) has been indicated to be a violation of the Unjustifiable Premiums and Misleading Representations Act.

The administrative order against company A this time was because company A basically determined the content itself and sent to the SNS of individual monitors, etc., content to the effect that bust size was greatly increased in a short time merely by drinking the product and undertook to post the experiences of individuals, and by incorporating this received comments such as “my bust was increased too much!”, “trick exposed for a large breasted voluptuous body simply a double effect of bust up and beauty care”, “have big breasts!?”, “my bust was always small…”, “AAA cup means you don’t need a bra!”, “many girls are succeeding with “big breasted bodies” and recently have become news”, “SNS is buzzing with models and instagrams for breast changes!”, “Is that only a dream!?”.

Indication of breast augmentation effects, etc., were directly sent to individual SNS accounts, but it can be said that this case clearly showed that the so-called stealth marketing, where the content is in effect controlled by the vender and upon getting a monitor to post it calling it an “experience” or “the world is talking about this now”, etc., acts will fall under the Unjustifiable Premiums and Misleading Representations Act.

From now it can be said that sales companies undertaking affiliate and influencer activities will need to recognize that stealth marketing will also fall under the Unjustifiable Premiums and Misleading Representations Act, and they will need to be careful in undertaking representations.

【In regard to misleading representations, a vender has a duty to indicate a rational basis for a statement of “has an effect”.】

In the case where there is a question about a misleading representation, the Consumer Affairs Agency will demand that documents setting out the basis for the representation are submitted.

In regard to this point, the determination standard of an unproven advertisement regulation will be used, and in regard to the effects and functions of the product being advertised, the vender will have 15 days after demand from the Consumer Affairs Agency to submit documents of proof and if the documents are not submitted an administrative order that the advertisement is illegal will be issued.

Note that these “documents of proof” must be “rationally based documents” and it is required that the documents are “contents that are objectively proven”.

In detail, the following fall under “contents that are objectively proven”.

Since it can be very difficult to prepare these documents within 15 days, it is important that a vender prepare “documents of proof” in advance when undertaking a representation.

(Standards for “rational documents”)

(1)the submitted documents are objectively proven content

(a) method for testing/investigation to obtain a result

The testing must be generally accepted in the related academic world and/or industry or a method that is accepted by specialists in the field. In the case where there is not an academic world or industry, or specialists in the field, who agree on a method, it is necessary to implement a method that is generally accepted by society and experimentally appropriate.

(b) standard for specialists, specialist groups or specialist associations opinions or academic references

Among specialists, etc., with objective valuation opinions or academic references that are generally accepted.

(2) the effect, function indicated and the content proven by the submitted documents are properly being handled

In addition to the submitted documents themselves being objectively proven content, the effect, function indicated and the content proven by the submitted documents must be properly being handled.

【What is a “misleading representation” under the Unjustifiable Premiums and Misleading Representations Act】

Finally, lets look at what kinds of representations are prohibited by the Unjustifiable Premiums and Misleading Representations Act.

Under the Unjustifiable Premiums and Misleading Representations Act, an unfair representation is prohibited. The unfair representations consist of three items: (i) a misleading representation, (ii) an advantageous misleading representation, (iii) other representations that might be misleading.

(1) a misleading representation

An inappropriate representation regarding the quality of the product/service, standard, or other content.

For example, the act of providing meat that is represented as “Matsuzaka Beef” when it is not Matsuzaka Beef, or the act of posting on a lodging site as a “hot spring” when it is not a hot spring, or indicating a diet effect by a representation of “lose 2 kilos in one week” when this is not proven.

(2) an advantageous misleading representation

This is a case where there is an unfair representation regarding the price of the product/service or other transaction conditions. Compared to a “misleading representation” which misrepresents the content or function or quality, etc., of the product or service, an “advantageous misleading representation” misrepresents the method of provision of the product or service or the terms, etc..

For example, a case where the representation is “limited time half price” but in actual fact it is always “half price”, or “10 purchasers will be chosen by lot to receive a game machine present!” but in fact only 2 games were prepared as presents, will fall under this category.

(3)other representations that might be misleading

The prime minister has indicated 6 categories that need to be regulated.

These fall under cases where a flyer for a product is advertised to customers but the product was not even prepared from the beginning and customers are told that it is sold out but another product is offered for sale (“bait and switch”).

（6 categories determined by the prime minister）

(i) representations about non-juice content of soft drinks

(ii) inappropriate representation regarding the country of origin of the product

(iii) inappropriate representation regarding lending costs for consumer credit

(iv) representations relating to bait and switch advertisements for property

(v) representations regarding bait and switch advertisements

(vi) inappropriate representations regarding paid nursing homes