In Japan, MLM (chain sales, Specified Commercial Transactions Act Art. 33) is legal but heavily regulated, while pyramid schemes (infinite chain schemes) are completely illegal under the Infinite Chain Scheme Prevention Act (3 years imprisonment or ¥3M fine). MLM regulations include: identity/purpose disclosure (Art. 33-2), prohibition of false claims (Art. 34(1)), anti-harassment rules (Art. 34(3)). Consumer rights: 20-day cooling-off period (Art. 40, longer than standard 8 days), mid-term cancellation within 1 year/90 days (Art. 40-2), cancellation for misrepresentation within 1-5 years (Art. 40-3).
MLM and Pyramid Schemes in Japan: Legality and Consumer Protection
Key Takeaways
- ✓Pyramid schemes are entirely illegal while MLM is conditionally legal
- ✓MLM contracts have a 20-day cooling-off period
- ✓Mid-term cancellation allows inventory returns and refunds under certain conditions
- ✓Claims guaranteeing profits constitute misrepresentation and are cancellable
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This article provides general legal information and does not constitute legal advice. For specific legal issues, please consult with a qualified attorney.
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