Beware of high-pressure sales tactics leading to consumer debt!

Sample Case

I was called to a family restaurant by my college senior, who encouraged me to try money-making schemes by saying, "If you buy an automatic FX trading system costing about 500,000 yen, you can earn money with it doing nothing." The system was too expensive for me to buy and I declined the offer. Then, my senior said, "Everyone take out a student loan to buy it. You will be eligible for student loans if you say you need money for going to a vocational school to get a qualification." He encouraged me to apply for a student loan and to write down a certain school name and a course name on the loan application form. Later, I borrowed 300,000 yen from a student loan. I handed the 300,000 yen as well as additional cash in my wallet to him. Next day, I borrowed 200,000 yen from another student loan and remitted the money to a specified account. However, I started to worry about being in debt of 500,000 yen. I was not given a written contract for the purchase of the automatic FX trading system. I don't know the company's postal address and other contact details. I haven't received the product yet, so I want to exercise cooling-off rights.

(man in his 20s)

Problems and Advice

It has been reported that consumers who experienced this kind of trouble were mostly young consumers in their 20s. When consumers declined to make a contract by saying "I can't afford it," they were induced to borrow money or make a credit contract for purchase.

The high-pressure sales tactics leading to consumer debt have been often seen in cases related to moneymaking schemes such as so called "online casino business," investment software, information products, etc.

(1) Think twice if it's worth going into debt

Even if you were told "You can earn money and pay back a debt," it's unsure if you can do so. Basically, investment is recommended only if you have spare money. It's highly risky to have a huge debt when there's no guarantee to be able to pay back the debt. Don't believe words like "Everyone is borrowing money," "You can earn money soon," etc. Never borrow money to invest.

(2) Decline flatly saying "I don't need it" rather than "I can't afford it"

If you say "I can't afford it," you may be encouraged to borrow money from a money lender or to make a credit contract for purchase. Even if it's difficult to say no to your friend, you should decline flatly saying like "I don't need it" and "No thank you" rather than "I can't afford it."

(3) Do not submit false statements to obtain a loan

In Japan, the Act on Specified Commercial Transactions prohibits door-to-door salespersons, etc. to induce consumers to submit false statements on income, savings, outstanding borrowings, etc. Even if you are told to submit false statements to obtain a loan or to buy on credit, ignore such words.

Reference:

• "Caution to young consumers No.4: Beware of high-pressure sales tactics leading to consumer debt!" released by NCAC on August 12, 2021 (Japanese version)