E-Commerce Sites and the Act on Specified Commercial Transactions: Advertising Disclosures, the Final Confirmation Screen and Special Return Terms in Practice

Hello, I'm Noriaki Asato, Representative Attorney at LegalAgent.

Even if you fill in the "Notation Based on the Act on Specified Commercial Transactions" page on your e-commerce site, the pre-launch check is not finished if shipping charges or subscription terms do not appear on the screen just before purchase. Where the person in charge of product pages, the person who configures the cart and the person who handles returns are different people, their respective explanations may also contradict one another.

The Act on Specified Commercial Transactions sets display rules for both the stage at which a customer views an advertisement and considers a purchase, and the stage at which the customer applies for the contract. With special return terms, there is also the issue that the applicable conditions change depending on how they are displayed. The core of the legal review of an e-commerce site is to decide on the company's own terms of sale and to make sure those terms are actually conveyed through the ordering process.

The explanation below mainly concerns e-commerce sites that sell goods to consumers in Japan. There are exemptions for transactions such as those made for business purposes, and in the provision of services and transactions subject to special regulations, some aspects are not treated the same way as mail-order sales of goods.

The Advertising Display Obligation and the Scope of the "Specified Commercial Transactions Notation"

Article 11 of the Act on Specified Commercial Transactions (Japanese) requires that, when the terms of sale of mail-order sales are advertised, the price, the timing and method of payment, the timing of delivery and so on be displayed. Where shipping charges are not included in the price, both the sales price and the shipping charges are covered. Where an application period is set, that period, and, with respect to withdrawal of applications and cancellation, the conditions including special return terms are also items to be displayed.

Item 6 of that Article and the Enforcement Regulations also provide for the seller's name, address and telephone number, the name of the representative of a corporation or of the person responsible for the mail-order business, and so on. The page titled "Notation Based on the Act on Specified Commercial Transactions" is used to convey this information to purchasers. The mere formality of having such a page does not mean that the representations in other advertisements and on the order screens need not be checked.

The Consumer Affairs Agency's "Mail-Order Sales" guide (Japanese) explains not only the items to be displayed but also the conditions under which they may be omitted. There is a system under which some items may be omitted if the seller states that it will provide documents or the like without delay upon request and actually takes measures enabling it to respond. However, some items may not be omitted, such as whether returns are accepted, conditions such as the period, and who bears the costs. An approach of "answering if asked" cannot be applied to every item that must be displayed.

Care is needed with a state in which orders are accepted while the return conditions field is left blank. Even if the policy is to accept returns, if the period and who bears the shipping charges are unclear, the purchaser cannot make a decision that takes costs into account. Where the conditions vary from product to product, make sure the common notation page and the description of each product do not contradict each other.

The Six Items on the Final Confirmation Screen and Rescission

Article 12-6 of the same Act sets out the items to be displayed where a purchaser places an order by following the application procedure prepared by the business. In online mail-order sales, this covers the final confirmation screen before the purchaser confirms the application. In addition to the advertising display under Article 11, it is required that the purchaser be able to confirm the content of the contract at this stage.

The covered items are six: the quantity of the goods, the sales price, the timing and method of payment, the timing of delivery, the details of any application period, and matters concerning withdrawal of the application and cancellation. In the price field, check whether the burden corresponding to the current order, such as the price of the goods purchased and the shipping charges, is reflected. In subscription purchases, the quantity of a single item or the first-time price alone cannot show the content of the contract as a whole, so the terms of the continuing transaction become the issue.

Paragraph 2 of the same Article prohibits representations that mislead the purchaser as to the fact that an operation constitutes an application for a contract, and representations that mislead the purchaser about the six items. A representation that makes the purchaser think they are simply proceeding to the next explanation when the operation actually confirms the order is to be examined in relation to this provision. Rather than judging the button wording in isolation, it is necessary to look at how it is conveyed to the purchaser, including the explanations before and after it.

Deficiencies in representations do not stop at administrative regulation. Article 15-4 of the same Act provides that where a purchaser is misled in a prescribed way by a false representation, failure to display required items or a misleading representation, and applies on the basis of that misunderstanding, the purchaser may rescind the manifestation of intention to apply. It is not a system under which every contract automatically becomes void if there is a display violation; the relationship between the representation, the misunderstanding and the application forms the requirements.

For this reason, the mere fact that "it is stated in the terms of use" may be an insufficient answer to issues concerning the final confirmation screen. In my view, it is necessary to make the judgment after confirming which route the purchaser ordered through and which representations they saw.

The Eight-Day Return Rule, Which Differs From Cooling-Off

Mail-order sales do not have the cooling-off system provided for door-to-door sales and the like. On the other hand, Article 15-3 of the same Act establishes a rule under which the purchaser may withdraw the application or cancel the contract until eight days have elapsed from the day on which the goods or the like were delivered. In this case, the costs of collection and return are borne by the purchaser. The system described here concerning sales of goods and the like cannot be applied as is to the cancellation of service contracts.

The proviso to paragraph 1 of that Article allows the seller to be exempt from this eight-day rule if it displays special terms concerning returns in the prescribed manner. Special terms under which returns for the purchaser's own reasons are not accepted, and special terms setting a company-specific return period, also need to be examined in terms of their content and display method.

What to watch out for in online mail-order sales is that display in advertisements alone is not sufficient. Where the transaction constitutes an electronic consumer contract, the proviso to that Article and Article 44 of the Enforcement Regulations (Japanese) require that, in addition to the advertisement, the special terms be displayed so as to be easily recognizable on the screen on which the application operation is performed. The Consumer Affairs Agency's guide also advises displaying them on the final confirmation screen.

It is premature to conclude that the eight-day rule can be excluded simply by writing "no returns" deep in the notation page. The question is whether the purchaser can understand, before applying, whether returns are accepted, the conditions such as the period if they are accepted, and who bears the return shipping charges.

Returns for the purchaser's own reasons and the handling of cases where the goods are broken or are not the type ordered should also be considered separately. The latter are situations in which contractual non-conformity liability under the Civil Code and the like become issues. A single line saying "no returns" does not necessarily exempt the seller across the board even from liability for defects in the goods, and the invalidity of clauses under the Consumer Contract Act must be examined separately. In my view, return guidance should be written so as not to confuse the contact points and conditions for cases where a purchaser returns normal goods for their own reasons with those for cases where the seller is notified of a defect.

Different Screen Checks for Single-Item Sales and Subscription Purchases

When applying these provisions to an e-commerce site, check not only what was entered in the cart's admin screen but also the order details displayed to the purchaser. If you select a product, change the quantity and delivery address, and proceed to just before confirming the order, it becomes easier to find discrepancies that cannot be seen from the common notation page alone.

In single-item sales, the items to check are whether the price after changing the quantity, the shipping charges for the delivery address, the timing of payment for the selected payment method and so on match the actual terms. Even when advertising "free shipping," if there are conditions relating to remote islands, the purchase amount or the like, check on both the product page and the order screen whether the representation enables the purchaser to understand those conditions. When the scheduled shipping date is changed, make sure the old schedule does not remain on the cart side even after the product description has been corrected.

In subscription purchases, it is necessary to show what quantity the purchaser is buying, at what price, from the first delivery through which delivery. If the contract has a fixed minimum number of purchases, present it so that the number of purchases and the total amount payable over the period can be checked without being separated from the discounted first-time price. If the contract continues indefinitely, representations tailored to that contract are required, such as the fact that it continues, the price for each delivery, the timing of payment and delivery, and the cancellation conditions. It is important not to handle contracts with a fixed number of deliveries and contracts that continue until cancelled with the same wording.

Even with guidance such as "cancel anytime," the impression the purchaser receives changes depending on how many days before the next shipment, and by what method, notice must be given. If the deadline for notice or the contact point cannot be determined from the screen, supplement the guidance and make it consistent with the actual method of acceptance. If the screen states that cancellations are accepted by telephone, the conditions explained by the staff at that contact point also become subject to checking.

Checking only the PC screens is not enough. Actually operate the site on a smartphone to confirm that text is not truncated, that the user can reach the return conditions, and that the order details can be checked and corrected. If there are routes that move to an external payment service or that switch from a regular purchase to a subscription purchase, also check what is displayed last on those routes.

If you save the screens checked before launch, matching them with the check date and the relevant products and plans, you can look up what was displayed when inquiries come in later. This is because, if a dispute with a purchaser arises, it is not the current screen but the advertisements, terms and screens at the time the application was made that serve as the basis for judgment. Records that allow the representations before and after a change to be traced are also useful when changing prices or cancellation conditions.

Administrative Sanctions and Penalties for Display Violations

The display regulations of the Act on Specified Commercial Transactions are backed by administrative sanctions such as instructions to improve business operations and orders to suspend business. Articles 14 and 15 of the Act set out the respective requirements, and there is no uniform sequence in which business suspension always follows an instruction. Even where the order screen has been revised, the handling of applications already accepted must be considered separately.

With respect to the final confirmation screen, failing to display required items in violation of Article 12-6, paragraph 1, or making false representations, is punishable by imprisonment for up to three years, a fine of up to JPY 3 million, or both (Article 70, item 2). Misleading representations under paragraph 2 of that Article are punishable by a fine of up to JPY 1 million (Article 72, paragraph 1, item 4). For violations in connection with a corporation's business, there are provisions imposing fines on the corporation in addition to the person who committed the act.

In light of these regulations, I think there is value in not ending the pre-launch check with proofreading a single notation page, but in checking the determination of terms of sale, the representations at the time of purchase, and the acceptance of returns and cancellations as a connected whole.