Three Per Cent While the Claim Was Up
Japan's misleading-representation penalty is not a fine with a number on it. It is three per cent of the sales you made, of the specific goods the claim was about, during the period the claim was up — and if you cannot report the facts the calculation rests on, the authority may estimate them. That makes the liability a function of a date range. Our sales records can answer "how much of item X did we sell between these two dates" to the cent. What no part of this product records is when a price or a claim started being displayed, or when it stopped.
A penalty shaped like a query
Article 8(1) tells the Prime Minister to order payment of an amount equal to the sales of the goods or services concerned, traded during the period subject to the penalty, calculated by a method a Cabinet Order specifies, multiplied by three one-hundredths. One thing worth flagging about that sentence: the official English translation of Article 8(1) <em>omits the rate</em>. The Japanese on the same page reads 百分の三 — three per cent — and the English of Article 8(5) confirms it by quoting "three one-hundredth" as the term being replaced on a repeat offence. If you are going to rely on a figure from a translation, this is a good reminder to read the column next to it.
Two thresholds sit in the same provision. No order is made where the operator had no knowledge throughout the period that the representation fell within the listed items, and the lack of knowledge was not due to gross negligence. And none is made where the amount would be under one and a half million yen — although here too the two columns differ slightly: the Japanese 未満 means <em>below</em> that figure, while the official English says "or less". A rounding of a threshold is not usually where a case turns, but it is the kind of gap worth knowing is there.
The period, which is the whole difficulty
Article 8(2) defines the period, and it is not simply "while the claim was up". It is the period during which the act was committed — plus, if you carried on selling those goods after you stopped making the representation, the stretch up to the last such sale occurring before the day six months after you stopped, or before the day you took the corrective measures a Cabinet Office Order specifies, whichever comes first. And if the whole thing exceeds three years, the period becomes the three years counted <em>back</em> from its last day.
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When the representation went up
The start of the period. Not a transaction date, not a record's creation date — the day a claim or a price comparison began being displayed to consumers.
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When it came down
The end of the act itself. Also not a transaction, and in most operations not written down anywhere except in somebody's recollection of a shelf edge or a web page.
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The six-month tail
If you kept selling the goods after the claim came down, the period runs on to the last such sale before six months have passed — or to the day you took the prescribed corrective measures, if that is earlier. So stopping the claim does not stop the clock; selling the goods does.
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The three-year cap, backwards
If the resulting period is longer than three years, it becomes the last three years of it. Which means a long-running claim produces a lookback of exactly three years from the end.
And if you cannot produce the figures, they will estimate them
Article 8(4) is the provision that makes all of this an operational problem rather than a legal one. Where the operator fails to report the facts the calculation is to rest on, the Prime Minister may estimate the sales amount by a reasonable method specified by Cabinet Office Order — using materials obtained from you, from the businesses that supplied you, or from the businesses you supplied. There is a separate consequence for failing to substantiate the claim itself: under Article 8(3), if you do not produce materials showing reasonable grounds within the period specified, the representation is presumed to be a misleading one. Article 7(2) goes further in its own context and says it is deemed to be. Two different words, both meaning you have lost the argument by not answering it.
One more figure, because it changes the arithmetic materially: where an operator has received a final payment order within the previous ten years and commits a further act on or after that order, the three per cent becomes four and a half.
The sales figure is easy and we can produce it for any window you name. The window is the hard part, and it is the half nobody records.
What our records can answer
Start with the good news, because it is genuinely good. Every till sale line carries an item and a quantity and a price, and the sale it belongs to carries a timestamp, a counter, a warehouse, a location, a currency code and a snapshot of the country it was taken in. Customer invoices carry the same shape on the credit side. Both are report datasets. So "the sales amount of these goods, traded between these two dates, in this currency" is a saved report, not a project.
Now the other half. An item in this product carries one buying price, one markup percentage and one selling price. There is no price list, no price history table, and no promotion or campaign record of any kind — a search across every migration for promotions, campaigns, price lists and pricing returns nothing. The discount table is not the missing piece either: a discount row attaches to a sale or to a sale line, with a description and an amount, which makes it a record of a discount <em>given</em> at a moment rather than a rule that was <em>in force</em> over a span.
What Article 8 needs, against what exists
| The input | Held today | Datable to a span | Reportable |
|---|---|---|---|
| Sales of a specific item, per period | Yes | Yes | Yes |
| The currency and country of each sale | Yes | Yes | Yes |
| The counter, warehouse and location it was sold at | Yes | Yes | Yes |
| The price the item was sold at, per line | Yes | Yes | Yes |
| The current selling price of the item | Yes | No | Yes |
| When a selling price started and stopped applying | Partly — configurable by you | Partly — configurable by you | No |
| When a claim or comparison was displayed | No | No | No |
| The corrective measure and the day it was taken | No | No | No |
Built and maintained Configurable by you, not maintained by us Not built
Row six is the interesting partial and it deserves credit. An item is audited: creating, updating and deleting one writes an entry with the actor, a timestamp, and the old and new values of whatever changed — so a selling-price change does leave a trail, and a price history can be reconstructed from it. Two things bound that. The audit log's default retention is 730 days, against a lookback this Act runs to three years. And the audit writer returns early when there is no authenticated user, so a price changed by a scheduled command or an unauthenticated import leaves no entry.
That pairing is worth stating plainly, because it is the sort of thing that looks fine from every angle until somebody asks a three-year question. The evidence you would use to establish the period exists, is well made, and is kept for two years by default. The liability is computed over three.
And the claim itself lives outside the system entirely
Even with a perfect price history, the harder half remains. A misleading representation is usually not a price — it is a sentence. A shelf talker, a banner, a spec table, a comparison against a competitor. Article 8(3) asks you to produce the materials showing reasonable grounds for it, within a period somebody else sets, and Article 35 lets a qualified consumer organization ask for the same materials, which you must endeavour to disclose unless they are trade secrets or there are other legitimate grounds.
So the artefact that would actually save you is a dated record of a claim, the goods it applied to, the evidence held for it, and the day it came down. This product has a document vault with classification and access logging, which is where the evidence belongs. What it has no shape for is the claim itself as a record with a start, an end and a list of the items it covered.
A claim is a dated record with items attached
Nothing below is a module, and the first two are useful for pricing reasons that have nothing to do with this Act.
A price with a start and an end
A selling price held as a dated row rather than as a single current value, so "what were we charging in March" is a query rather than an audit-log reconstruction.
A claim as a record
A start date, an end date, the text of the representation, the items it applied to, and the surfaces it appeared on. Small, and it is the thing the whole penalty period is measured from.
Substantiation attached to the claim
The evidence for the representation filed against it in the vault, with its classification and its access log, so a request for materials is a retrieval rather than a search.
A retention decision for the audit trail
The trail set to outlive the longest lookback you are exposed to, rather than to the operational default.
The first is the larger piece and pays for itself across margin analysis and promotions. The second is a small table and a join. The third is a relation into machinery that already exists. The fourth is a setting, and it is the one to change first because it costs nothing and cannot be applied retrospectively.
Tell us what your operation needsFour questions for a system that will price against a claim
What was this item's price six months ago?
What you will probably hear
You can see it in the audit log.
How to read it
Which is a real answer and a fragile one. Ask two things: how long the audit log is kept, and whether every price change is logged — including ones made by imports and scheduled jobs, which in many systems, ours included, run without a user and therefore without an entry.
Can a price have a start and an end date?
What you will probably hear
You schedule the change.
How to read it
A scheduled change and a dated price are different things: the first tells you when the value moved, the second tells you what was in force on a given day without replaying history. Ask which one you get, because only the second answers a regulator's question directly.
Where does a marketing claim live?
What you will probably hear
In the marketing system.
How to read it
Then the claim and the sales it drove are in different systems with no shared identifier, and the period a penalty would be computed over has to be assembled by hand. Ask whether a claim can be recorded against the items it covers, with dates — it is a small table and almost nobody has it.
How long do you keep the audit trail?
What you will probably hear
A couple of years.
How to read it
Compare that against your longest lookback. This Act reaches three years; several tax regimes reach longer. A retention default chosen for operational tidiness is the wrong input to that decision, and it is the one setting here that cannot be fixed after the fact.
Our take
If you sell to consumers in Japan, the exposure here is a multiplication and you already hold one of the two operands. Sales of a named item over a named window, in the currency it was taken in, at the counter it was taken at — that is a report we can build today. What you should do before you need it is much smaller than a build: raise the audit-log retention above three years, because a price history reconstructed from a trail that has been pruned is not a history. Then record your claims somewhere dated, even as a spreadsheet keyed on item codes, because the day a banner came down is a fact nobody writes down and the penalty period starts and stops with it. The price-history table is the real fix and it earns its place for margin reasons anyway.
What AWRA OpsHub does today
- Sales of any item over any window, from till sale lines and invoice lines, each carrying a quantity and the price it actually went out at.
- Every sale placed in space and time, with a counter, a warehouse, a location, a timestamp and the currency and country snapshotted onto the record.
- Reports over those datasets, saved, scheduled and exportable, so a sales figure for a period is a definition rather than a request.
- An audit trail on the item record, writing the actor, the moment, and the old and new values of whatever changed — including a selling price.
- A document vault with classification and access logging, which is where substantiation for a claim belongs.
- Discounts recorded against the sale or the line they were given on, with an amount and a description.
- Custom fields on items and till sales, so a claim reference or a campaign code can be recorded, reported and exported today.
More we can add to your workspace
- A selling price with a start and an end date, so what was in force on a given day is a lookup rather than a replay of the audit trail.
- A claim or representation as a dated record, with the items it covered and the surfaces it appeared on.
- Substantiation linked to the claim it supports, so a request for materials is answered from one place.
- A price change made without a signed-in user recorded, for changes arriving through an import or a scheduled job.
- An audit retention that follows the longest lookback, rather than the operational default of seven hundred and thirty days.
- A promotion as a rule with a period, distinct from a discount recorded on a transaction after the fact.
- A corrective measure recorded with its date, which is one of the two events that can close the period this penalty is computed over.
Where we point you to a specialist
- We will not tell you whether a representation is misleading. That is the whole question, it turns on Article 5 and on how an ordinary consumer would read your words, and the authority may require you to substantiate the claim within a period it sets. A Japanese advertising or consumer-law practitioner owns it, and no system can hold the judgement for you.
- We will not compute the penalty. The sales amount is calculated by a method a Cabinet Order specifies, and we did not read that Order — which means the figure we could produce is a sales total for a period, not the statutory base. We will give you the total, name the window it covers and show the transactions inside it, and we would rather do that precisely than produce something labelled as the penalty.
- We hold a position on audit retention, and it is that the period should be chosen against your longest legal lookback rather than against how much history feels useful. This is the one item on the list that cannot be fixed later: a trail already pruned is gone, and a price history reconstructed from a partial trail reads as complete when it is not, which is worse than saying plainly what you hold.
The fifth item is a setting and should be changed this week — it costs nothing and every other item on this list is worth less without it. The first is the substantial build and it is the one we would recommend regardless, because a dated price is what makes margin analysis honest as well as what answers a regulator. The second and third go together and are small: a table with two dates and a list of item codes, and a relation into the vault we already have. The fourth is a change to how the audit writer handles an unauthenticated actor. The sixth and seventh follow naturally once a price can have a period.
Tell us which of your prices had a period
Almost every system holds the price something is being sold at now, and almost none holds the price it was being sold at then. That is fine until a liability is denominated in a date range. We looked at what a price has to be, as a matter of display, in <a href="/blog/five-things-a-price-has-to-be">Five Things a Price Has to Be</a>; this is the same field seen from the time axis. And note that we read this Act in a translation the Ministry of Justice itself describes as unofficial, with one figure taken from the Japanese column because the English omits it.
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