JAPAN Trends and Developments Contributed by: Kensaku Yamamoto, Laarni Vinas, Junko Asai and Kosuke Masuda, SHUSAKU
Legal precedents and regulatory actions Several notable cases reflect the risks of mis- leading “No.1” ads. A recent court case from the Sapporo District Court involved a dispute between a cosmetics company and two defend- ants due to misleading advertisements and unfair competition. The court ruled in favour of the plaintiff, ordering the defendants to pay JPY360,000 in damages, as the defendants had advertised its product as the “No.1 Choice for eye cream” without having substantiated the results of the survey on which they based this claim. In another notable case from early 2023, the online tutoring company Banzan was subjected to administrative sanctions for using misleading “No.1” ads on its website. The CAA found that the company’s claims, such as “Top Customer Satisfaction”, were based on flawed surveys where respondents’ use of the service was not verified. This led the CAA to issue a cease-and- desist order, highlighting the importance of using accurate and transparent methodologies for such adverts. Additionally, a rental Wi-Fi service provider was sanctioned for misleading consumers with “Customer Satisfaction No.1” and “Most Cho- sen by Overseas Travelers” advertisements. These adverts were based on superficial image surveys, which did not involve actual users of the service. Instead, respondents were asked about their impressions of various companies’ websites, which the CAA deemed insufficient evidence to support strong claims of superiority. Ensuring compliance with “No.1” advertisements The 2024 CAA report reaffirms that all “No.1” claims must be based on sound, reasonable evi-
dence. For a “No.1” advertisement to be legally valid, it must meet two key conditions: 1. The survey or data supporting the advertise- ment must be conducted using methods that are widely accepted within the relevant academic or industrial community, or considered valid based on social norms and common experience. 2. The content of the advertisement must accu- rately reflect the survey results or data. For subjective “No.1” ads, additional criteria must be met: • The product or service being compared must be selected fairly, with relevant competitors included in the comparison. • The survey respondents must be selected objectively, without bias, and should include actual users where relevant. • The survey should be conducted impartially, without leading respondents to favour one Advertisements involving endorsements from experts, such as “90% of Doctors Recommend This Product”, have been similarly scrutinised. The report points out that such claims must be based on transparent, verifiable methods of research. For instance, it is not enough for respondents to self-identify as “experts”. The advertiser must verify that the respondents are indeed qualified professionals in the relevant field, and the survey must be conducted in a manner that ensures impartiality. Additionally, the experts’ recommendations must be based on factual, objective evidence about the prod- uct, not unsubstantiated results. company over others. Expert endorsements
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