A new type of black-market financing disguised as purchasing salaries is rampant. It is feared that people who are driven into a corner economically by the new coronavirus will be harmed.
At issue is a deal called "salary factoring." A financial operator buys the right to receive the salary of a customer, which becomes a claim, and then gives the customer cash after deducting a commission. At a later date, when the customer receives their salary, they pay the operator the amount equivalent to the claim.
There are many advertisements on the internet that say "This is not debt" and "The interest rate is zero."
It is similar to the purchase of companies' accounts receivable, but in reality it is no different from lending cash at high interest rates. It is understandable that the Financial Services Agency is calling for caution, saying, "These are illegal loan sharks."
In many cases, the commissions charged to customers are high, ranging from several hundred percent to more than 1,000% if treated as annual interest.
If an operator fails to register as a moneylender, they will be charged with violating the Money Lending Business Law, and if they earn more than 20% in annual interest, they will be charged with violating the law regulating interest rates. If the annual interest rate exceeds 109.5%, an operator can be sentenced to up to 10 years in prison or fined up to 30 million yen. It is a serious crime.
Lawyers' groups for victims and the National Consumer Affairs Center of Japan have received many inquiries about "salary factoring." There are many cases of people repeatedly using the system and having trouble repaying their debts. Some customers have been harassed by phone calls from financial operators, while others have been inconvenienced by moneylenders who barged into their workplaces.
Since April, some people have complained during consultations with these bodies that they have been unable to make payments because their income has decreased due to the stagnant economy caused by the coronavirus outbreak. It can be said that specific types of damage have become apparent due to the virus-caused crisis.
Although the declaration of a state of emergency has been lifted in some areas, it will take time for the economic situation to recover. It is feared more people will use the so-called salary factoring system to get cash for immediate use.
It is essential for the central and local governments to inform people of the danger of the system. It is also important to strengthen the consultation system of bar associations.
It is also necessary to pay attention to online advertisements that try to lower the psychological hurdles of possible borrowers.
The FSA is asking Google and other search engines to remove ads for the system. It is advisable for such companies to work together to monitor problematic advertisements.
To prevent further damage, it is essential to crack down on malicious businesses. Police authorities have to thoroughly investigate cases in cooperation with the FSA and other entities.
(From The Yomiuri Shimbun, May 23, 2000)
Read more from The Japan News at https://japannews.yomiuri.co.jp/
