Advertising & Marketing 2022 Comparisons

In Japan, advertising practices are primarily regulated under the Act against Unjustifiable Premiums and Misleading Representations (AUPMR), which is now classified as consumer protection law but was originally a special law of the Antimonopoly Act.

In addition to setting certain limitations on providing premiums (as discussed in 7.1 Sweepstakes and Contests), the AUPMR also prohibits false labelling, deceptive advertising and misleading representations with the capacity to mislead consumers into believing that the nature (that is, the quality or manufacturing standards) and/or trade terms (price or quantity) of a product or service are substantially better than they are in reality or than those of competitors’ products.

Claiming that a product is superior to the equivalent one of a competitor’s is permitted as long as the statement is truthful, while a false statement of superiority is unlawful under the AUPMR.

The second relevant regulation for advertising practices is the Unfair Competition Prevention Act, which prohibits several specific types of unfair competitive practices, for example:

• causing goods or services to be confused with those of another party;
• using an indication in connection with goods or services that is identical or similar to a famous indication of another party; and
• misleading consumers about the quality of goods or services.

The Consumer Affairs Agency (CAA) is the national regulator enforcing the AUPMR. If someone contravenes the provisions of the AUPMR on either the misleading representation or the unjustifiable amount of premium, the CAA can issue a cease-and-desist order requiring the violator to:

• cease committing the breach;
• take measures necessary to prevent its recurrence; and
• take any other necessary measures, including public notification specifying the implementation of said measures.

In addition, for an infringement of the AUPMR on misleading representation, the regulator can also order the violator to pay the National Treasury a surcharge equivalent to 3% of the proceeds from its sales of goods or services transacted during the period when the alleged misrepresentations were committed (“surcharge payment order”).

If the alleged conduct would only affect the market of a particular prefecture, the local government of that prefecture can investigate the case. While the local government can, like the CAA, issue a cease-and-desist order, it has no authority to issue a surcharge payment order.

Both cease-and-desist orders and surcharge payment orders are issued against the business operator who committed the alleged misleading advertising, rather than any individual who belongs to the corporation involved.

The Japan Advertising Review Organisation (JARO) is not a governmental authority but a private organisation established in 1974 to achieve appropriate standards for advertising and representation. The JARO provides advice to its member companies on how their proposed advertising can be improved so as not to be misleading to consumers and, when it receives complaint about any advertising, examines the complained-about advert and issues recommendation to revise it if it is found to be misleading.

If there is misleading representation prohibited under the AUPMR or the threat of it, the “qualified consumer organisation” designated under the Consumer Contract Act is entitled to file for an injunction with a court to get the defendant to stop making such representation.

Consumers themselves cannot directly file the action, but can provide information on the suspected misrepresentation to the qualified consumer organisation, followed by the organisation sending to the prospective defendant a written advance notice providing a summary of the claim, the essential points of the dispute, and other particulars specified by Cabinet Office Order.

The action may not be filed until after one week has passed from the time that the written notice has been received; provided, however, that this does not apply if the prospective defendant refuses to accept the claim for injunction.

Due to the COVID-19 pandemic and the prolonged work-from-home situation, there has been an increase in health-related advertising and demand for health foods in the Japanese market, and the increasing number of food manufacturers have been making health claim for their products, not only traditional health foods such as nutritional supplements but also general foods made from healthy ingredients.

In response to this trend, the CAA has focused its investigations against misleading advertising of food products with “good for health”-type claims that may mislead consumers as to the real benefits (if any) of the products.

Since the COVD-19 pandemic, the CAA has vigorously investigated misleading advertising of health foods, health appliances or sterilisation sprays claiming a preventive effect on the transmission of the virus on suspicion of violation under the AUPMR.

The CAA has not published any regulation specific to the advertising of claims that a product prevents or lessens the effects of COVID-19, but on 19 February 2021, it announced that, considering the nature and characteristic features of COVID-19 were still not fully understood, any product claiming a preventive effect on COVID-19 was likely to be misleading to consumers and 45 businesses received the CAA’s call for improvement of their advertising in this regard.

On 7 June 2022, the Basic Policy on Economic and Fiscal Management and Reform 2022 was endorsed by the Japanese Prime Minister Fumio Kishida and his cabinet. The policy included development of institutions to prevent digital advertising that misled consumers as to the quality of the goods or services. To that end, the CAA established a panel of experts to discuss possible legal issues arising from stealth marketing and plans to publish a comprehensive report on the outcome of the discussion by the end of 2022.

Whether advertising claims are misleading is determined based on how general consumers would be affected by the advertising. To find the impression of general consumers, the CAA considers the entire content of an advert, rather than an individual sentence, chart or picture contained therein, as the basis of judgement. 

Moreover, the CAA has recently tended to use marketing research or surveys on what impression consumers have received from an advertising claim in order to identify the impressions of general consumers.

In Japan, all advertising claims are subject to the AUPMR, except for some advertising methods that do not claim any specific benefits of a product or would not give an impression of any such benefits. Such adverts are known as image advertisements or “puffery”, which aims at improving the abstract image of products such as name recognition or popularity.

Under the AUPMR and its related regulation, when any advertising is suspected of misleading customers as to the quality of a product or service, the CAA or local government is entitled to give a seller or provider of the advertised product or service a notice requiring the recipient to submit sufficient substantiation of the advertising within 15 days after the receipt of the notice. Upon a failure to provide the required substantiation, including where submitted documents are not considered to be sufficient substantiation by the CAA, the advertising shall be deemed as a misrepresentation in violation of the AUPMR.

Under the CAA’s guideline concerning substantiation of advertising, the advertised claim must be substantiated by objectively proven methods (as explained in 2.4 Testing to Support Advertising Claims) and the outcome of the substantiation is required to properly correspond to the advertised claim.

As stated in 2.3 Substantiation of Advertising Claims, in order for the testing to sufficiently support advertising claims, it must be done by an “objectively proven method”, which is required to be either of the following:

• research or experiments based on generally recognised methods in the relevant section of academia or industry, or approved by most experts in the relevant field; or
• generally recognised professional opinion or academic literature where an expert in the relevant field objectively assesses the claimed benefit in the advertising.

Human clinical studies are not necessarily required for substantiation. However, as stated in 2.3 Substantiation of Advertising Claims, the outcome of the substantiation must properly correspond to the advertised claim. Thus, if general consumers would be given the impression, on the basis of the advertised claim, that the claimed benefit to the human body had been proven, it would require human clinical studies to substantiate the claimed benefit.

In Japan, there are no special laws or regulations that address stereotyping in advertising or issues of inclusion, diversity and equity.

So far, there are no special laws or regulations that apply to environmental claims in advertisements or “greenwashing” in Japan. However, the AUPMR prohibits deceptive advertising or misleading representations that would mislead consumers as to the nature of product or service. As such, it is possible that conveying misleading information about the environmental impact of a product would constitute a violation of the AUPMR, so long as general consumers would be given the impression, by the advertised claim, that the environmentally friendly nature of a product was being claimed as a benefit of that product.

There is a government pronouncement that provides special rules for claims concerning country of origin. The pronouncement specifies the following examples that would fall within misrepresentation in violation of the AUPMR when it would make it difficult for the general customers to recognise a product’s real country of origin.

• A representation on a product made in Japan that consists of:
1. the name of any foreign nation or any place in foreign nation, foreign national flag or national emblem, or something similar to them;
2. the name or trademark of a foreign business operator or designer; or
3. foreign language that accounts for all or the majority of the letters in the representation.
• A representation on a product made in a foreign nation that consists of:
1. the name of any other nation or any place in other nation, national flag or national emblem of any other nation, or something similar to them;
2. the name or trademark of a business operator or designer of any other nation; or
3. Japanese language that accounts for all or the majority of letters in the representation.

The CAA has published its guidelines concerning comparative advertising claims, where specific examples of claims that would fall within misrepresentation in violation of the AUPMR are given, as stated in 3.2 Comparative Advertising Standards.

Moreover, comparative advertising claims may constitute violation of the Unfair Competition Prevention Act when they are found to be misleading representations about the quality of goods or services, or false advertising that causes damage to a competitor’s credit.

Under the CAA’s guideline concerning comparative advertising claims, in order for the claim not to constitute violation of the AUPMR, it is required to meet the following standards:

• the claim must have been substantiated through an objective method;
• the substantiated number or fact must be accurately cited in the advertising; and

• the method of comparison must be fair.

Any business operator who has suffered from damage caused by comparative claims made by competitors can file action with the courts under the Unfair Competition Prevention Act seeking damages, an injunction for the cessation of the advertising and the publication of an apology.

There are no special rules or regulations that apply to advertising on social media in Japan.

While there are not yet any specific rules for advertising on social media in Japan, this kind of advertising is also subject to regulation under the AUPMR as with any other form of advertising. Furthermore, as stated in 1.8 Politics, Regulation and Enforcement, the Japanese government has recently focused on developing institutions to prevent digital advertising that could mislead consumers as to the quality of the goods or services advertised. For example, by the end of 2022, the CAA plans to publish a comprehensive report on possible legal issues arising from stealth marketing, which can be made thorough social networking services. As such, it is likely that the CAA will vigorously investigate misleading advertising on social media in the near future.

The AUPMR regulates sellers or providers of an advertised product or service who have, directly or indirectly, committed misrepresentation of the product or service. Therefore, whether there is liability for the advertiser for content posted by others on the advertiser’s site or social media channels depends on how the advertiser is involved in making the advertising.

Taking stealth marketing as an example, under the CAA’s guidelines concerning internet advertising, it could be construed as a violation of the AUPMR for a seller or provider of an advertised product or service to instruct the owner of a rating site to manipulate the rating of its product or service as that would lead to consumers being misled into believing that the quality of the product or service was better than it was in reality. As in this example, if the advertiser is found to have indirectly committed to making the advertising, it could be construed that the advertising has been made by the advertiser in violation of the AUPMR.

In Japan, there is no specific rule on media disclosure requirements for social media ads.

So far, there are no special rules or regulations that apply to the use of social media platforms in Japan.

So far, there are no special rules that apply to “native advertising” (ie, advertising that has the look and feel of editorial content). While the AUPMR prohibits deceptive advertising or misleading representations that would mislead consumers as to the nature of product or service, it is unlikely that native advertising would constitute a violation of the AUPMR just because it pretends to be editorial content, unless it misleads consumers into believing that the advertised product or service was substantially better than it was in reality.

In Japan, there is no special law that specifically covers misinformation on topics of public importance.

With the growth of social networking services (SNS), it is reported that an increasing number of companies are using influencer campaigns through SNS to market their products or services. Recently, Japan has seen a number of famous YouTubers being used to promote products or services.

While there is no specific rule for the use of influencer campaigns in Japan, they are also subject to regulation under the AUPMR as with any other way of advertising. For advertiser’s liability, please see 5.3 Advertiser Liability for Influencer Content.

As stated in 4.3 Liability for Third-Party Content, if a seller or provider of an advertised product or service instructs owner of a rating site to manipulate the rating of its product or service such that consumers are misled into believing that the quality of the product or service is better than it is in reality, this could constitute violation of the AUPMR.

The same would apply where an influencer is instructed by a seller or provider of the advertised product or service to give an endorsement of the product or service to the public with false or misleading information. In this case, the seller or provider of the product or service could be construed as the advertiser and the provider of the false or misleading information and therefore be liable for the same under the AUPMR.

As stated in 4.3 Liability for Third-Party Content and 5.4 Misleading/Fake Reviews, manipulating a rating or review of a product or service through any other people could constitute a misleading representation by the product or service provider in violation of the AUPMR.

As also addressed in 1.8 Politics, Regulation and Enforcement, the CAA has established a panel of experts to discuss possible legal issues arising from stealth marketing and plans to publish a comprehensive report on the outcome of the discussion by the end of 2022. Following this, it is likely that more specific rules on “fake reviews” will be established.

Under the Specified Commercial Transaction Act, it is prohibited to send email advertising for mail-order sales to customers unless each customer requests the email or consents to receiving the email in advance.

Under the Specified Commercial Transaction Act, it is required for a telemarketing operator to disclose in advance the name of the company and the individual who is calling, the type of product or service to be sold, and that the purpose of the call is to solicit for engaging agreement. Upon receipt of an offer from, or the completion of agreement with, a customer, the operator is also required to provide notice to the customer specifying the type of product or service to be sold, its price, payment term, etc.

While there is not a specific rule applicable to text messaging, the same rules as discussed in 6.1 .Email Marketing apply.

Under the Private Information Protection Law, when an advertiser gets a customer’s personal information in the course of targeted or interest-based advertising, it is generally required to notify the customer of the purposes for which that information will be used, and when the information is to be transferred to a third party, it is also required in general to obtain consent from the customer in advance.

Moreover, since the latest amendment of the Private Information Protection Law, which came into force in April 2022, cookie data, IP address data and web-browsing history data are also subject to protection under the law. In other words, even if this information has insufficient connection to an individual customer to constitute personal information, it could still be protected as “related personal information.” As a result, if, after being transferred in the process of targeted/interest-based advertising, the information could be treated as personal data by its recipient, it is required for the advertiser to obtain explicit consent from the customer about transfer of the information.

In Japan, there are no mandatory rules applicable to marketing to children. However, some industries have self-regulatory standards for the purpose of protecting the rights of children. For example, the Japan Commercial Broadcasters Association has a broadcasting standard providing that commercials shall not unduly instigate children’s desire for gains or to buy.

In general, selling lottery tickets is permissible only for local authorities under the Public Lottery Tickets Act in Japan. Lotteries are usually defined as games of luck where participation is subject to payment of a financial contribution by the participant. For private firms or individuals, selling lottery tickets constitutes a criminal offence punishable with a prison sentence of up to two years or a fine of up to JPY1.5 million under the Japanese penal code.

In contrast to lotteries where premiums are provided in exchange for financial considerations, providing premiums associated with sales of products or services for inducing customers to purchase the products or services is not prohibited so long as the value of offered prize does not exceed a certain limit. The AUPMR stipulates this limit separately for two different types of premium offers:

• prize competitions (PCs), which are defined under the relevant government notice as providing premiums in a way of determining winners by chance (generally called a prize draw) or through superiority or correctness in a particular performance (generally recognised as a prize competition); and
• premium offers to general consumers (POGCs), which are defined as providing premiums by any other means than PCs, a typical example of which is providing premiums to every customer who visits a store.

The AUPMR prohibits business operators from providing premiums associated with their selling products or providing services by way of a PC if the value of prize to be provided to the winner exceeds the following limits.

• Maximum value – the maximum amount of the premium to be provided to each winner must not exceed:
1. for regular prize competitions run by a single business operator, 20 times the unit price of the relevant product or service where the unit price is less than JPY5,000 or JPY100,000 where the unit price is JPY5,000 or higher; and
2. for prize competitions jointly operated by several business operators, the maximum amount of the premium to be provided to each winner must not exceed JPY300,000.
• Total value – the maximum total premium permitted for:
1. regular prize competitions is 2% of the estimated sales amount of the relevant products or services associated with the premium to be sold while the premium campaign is undertaken; and
2. joint prize competitions is 3% of the estimated sales amount of the relevant products or services.

The AUPMR sets separate limitations on the maximum amount of the premium to be provided to each customer in a POGC, which is JPY200 (when the unit price is less than JPY1,000) or 20% of the unit price (when the unit price is JPY1,000 or higher).

Apart from the general rules set out above, the government notice provides special standards on provision of premiums in certain industries (that is, newspapers, magazines, real estate, medicines and medical devices).

Japanese law does not distinguish between contests of skill and games of chance. Both of them are categorised into the PC as provided in 7.1 Sweepstakes and Contests.

It is not required in Japan to pursue registration or obtain approval for implementing the games of chance or contests of skill.

While there is not a special rule that applies to loyalty programmes in Japan, they are subject to regulation around providing premiums as stated in 7.1 Sweepstakes and Contests, if applicable.

Discounting the price of products or services will not constitute a provision of premiums under the AUPMR and is therefore free from the limitation on value of premium.

The use of free offers is generally allowed. It is common for customers who purchase a certain product to be given a coupon which entitles them to an extra one free or a discount. In this case, as long as the product to be provided through the use of the coupon is virtually identical to the product originally sold to the customer, it will not be a “premium” regulated under the AUPMR.

On the other hand, providing a coupon in cross-couponing (where customers who purchased product A are given a coupon which entitles the customer to a free offer or discount of a different product B) can be construed as “providing a premium” under the AUPMR and therefore be subject to the limitations set out in 7.1 Sweepstakes and Contests.

In value promotion, the price display must not be misleading under the AUPMR.

Further, if the price of a product goes below the cost attributable to manufacturing and selling the product, and where this may make it difficult for competitors to continue businesses in the relevant market, that pricing can violate the Antimonopoly Act as unfair price-cutting.

Under the Consumer Contract Act, the automatic renewal or continuous service offers under which a marketer can continue to ship and bill for products and services on a recurring basis until the consumer cancels could be unlawful if the automatic recurrence would unilaterally harm the interest of a consumer.

Normally, the automatic recurrence benefits a customer by saving steps to renew contract so long as the terms of a contract do not change, so in that case, a contract with automatic renewal clause would be valid.

However, in cases where the terms of a contract changes with automatic renewal in a way that harms the interest of the consumer, for example, shifting from a charge-free to an onerous contract, that may be invalid unless the business operator provides the customer with a sufficient explanation on the change of condition in advance.

In Japan, any form of gambling is generally prohibited and criminally sanctioned under the Japanese Penal Code unless otherwise permitted under each special act. For example, as discussed in 7.1 Sweepstakes and Contests, selling lotteries in general are permissible only for local authorities under the Public Lottery Tickets Act. It is also permissible for the National Agency for the Advancement of Sports and Health to sell sports lottery tickets under the Sports Promotion Lottery Law.

As discussed in 8.1 Legality & General Regulatory Framework, selling sports lottery tickets is permissible only for the National Agency for the Advancement of Sports and Health under the Sports Promotion Lottery Law. Other than that, there are no special rules or regulation that apply to the advertising and marketing of sports betting.

Depending on its nature, cryptocurrency or NFTs could fall within the regulatory scope of securities or crypto-assets under the Financial Instruments and Exchange Act. If that is the case, advertising, marketing or sale of cryptocurrency or NFTs are strictly regulated under the same law, for example, requiring registration as a financial instruments business or a crypto-asset exchange service.

While there is not specific rule applicable to advertising within the metaverse so far, it is also subject to the AUPMR.

Since March 2021 when the Act on Transparency of Transaction through Digital Platforms was enforced, the Ministry of Economy, Trade and Industry has designated several online mall operators, app store operators and major digital platform operators as targets of restriction under the Act. These digital platformers have been required to disclose terms and conditions, establish systems for enhancing transparency of transactions and regularly report to the Ministry on measures taken.

In Japan, apart from the AUPMR, there are some rules or restrictions that apply to the advertising of regulated products.

For example, as to drugs and medical devices, it is prohibited under the Pharmaceutical Affairs Act to publish exaggerated and false claims regarding products or advertise the products before obtaining approval.

Apart from regulated products, there are specific rules that apply to the advertisement of certain categories of product in Japan.

Taking foods as an example, the Pharmaceutical Affairs Act also prohibits manufacturers or sellers of health foods from claiming medical efficacy in advertising their food products. It is also prohibited for food companies to make health claims on food products that are considered to be exaggerated and false under the Health Promotion Act.