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Cabinet Approved the Bill on the Act for Partial Revision of the Installment Sales Act

On October 18, 2016, the Cabinet approved the Bill on the Act for Partial Revision of the Installment Sales Act, which will be submitted to the 192nd extraordinary session of the Diet. In recent years, the number of victims involved in credit card fraud has grown, including leaked credit card numbers and unauthorized use, and accordingly, the number of consumers facing problems caused by such fraud is also escalating. To address this situation, the revised Act will stipulate necessary measures to develop an environment in which consumers are able to use credit cards in a safe and secure manner.

1. Purpose of the bill

In recent years, the number of victims involved in credit card fraud has grown, including leaked credit card numbers or related information and their unauthorized use, due to sellers who improperly handle credit cards. In addition, a new business model, in which the credit card issuer is different from the acquirer: the company that concludes a contract with the seller, is becoming popular in the credit card industry. Along with this trend, some acquirers are not able to appropriately manage sellers who handle customers’ credit cards.

In light of this situation, METI will take necessary measures under the revised Act to realize an environment in which consumers are able to use credit cards in a safe and secure manner, while taking into account a new trend under which companies providing innovative financial services in the field of financial technology (FinTech) will enter the substitute service industry concerning settlement transaction. Furthermore, these measures will also contribute to attracting inbound demand in light of the forthcoming 2020 Tokyo Olympic and Paralympic Games.

2. Outline of the bill

1) Appropriate management and other control of credit card information

The revised Act will require sellers to appropriately manage credit card numbers and other information and to prevent unauthorized use by third parties through introducing IC devices into their transaction terminals or through other means.

2) Fortifying the management of sellers

The revised Act will stipulate a registration system for registering acquirers and will also require acquirers to inspect the sellers as contractors and to take necessary measures against them in line with inspection results.

3) Developing a business environment through forecasting the new entry of FinTech businesses into the credit card industry

  1. The revised Act will allow FinTech businesses to win a legal position through the same registration as acquirers when such businesses secure related systems. Therefore, the Fintech business could undertake the obligation of the acquirer required by the bill as in item 2) above.
  2. Concerning the requirement for sellers to issue hard-copy information to consumers when credit cards are used, the revised Act will allow sellers to also provide such information through electromagnetic methods.

4) Measures for addressing the revision of the Act on Specified Commercial Transactions (June 2016)

The revised Act on Specified Commercial Transactions expanded the coverage of consumer rights in regard to rescinding sales contracts with sellers that have been concluded as a result of such sellers’ unjust soliciting. In line with this revision, the revised Installment Sales Act will also stipulate the same measures in regard to consumers’ contracts for installment payments with the issuers, which have been concluded in parallel with such sales contracts under the Act on Specified Commercial Transactions.

3. Effective date

The revised Installment Sales Act will come into effect as of the day specified by Cabinet Order within a period not exceeding 18 months from the date of promulgation.

For further details, see the Japanese language news release.

Release date

October 18, 2016

Division in Charge

Commerce Supervisory Division, Distribution and Industrial Safety Policy Group

Ministry of Economy, Trade and Industry1-3-1 Kasumigaseki, Chiyoda-ku, Tokyo 100-8901, Japan Tel: +81-(0)3-3501-1511
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