Mail order scofflaws are the exception that proves the rule

September 15th, 2014 by Philip Brasor & Masako Tsubuku

The gods know if you're honest: An unmanned farm stand in Inzai

The gods know if you’re honest: An unmanned farm stand in Inzai

A recent article in the Asahi Shimbun described a small cross section of consumers who take advantage of a peculiar aspect of mail-order sales in Japan. Some small- and medium-sized sales agents who do their business over the Internet have problems with customers who don’t pay. In most cases, Internet and mail order sales are done on a prepaid basis: The buyer either provides credit/debit card information or makes a bank/post office money transfer prior to the item being shipped. But a few work on what can best be described as the honor system. They send the item to the buyer with a bill that the buyer pays after receiving the item. Sometimes the bill has a handling fee attached and sometimes it doesn’t.

According to the Asahi article, some people don’t pay up, and perhaps never intended to. A non-profit organization called the Mail Order Unpaid Protection Network (MOUPN), which monitors such scofflaws, estimates that mail-order sales companies lose about ¥20 billion a year to such people.

Asahi, in fact, found one, though he seems reluctant to admit it. In the article, a reporter visits an unnamed man “in his 50s living in an apartment in Tokyo.” The man receives an order of green tea by courier, but the reporter notes that the name on the package is that of a woman. “I made the order on behalf of a friend,” the man explains. When asked why he didn’t use his real name, the man doesn’t answer. Other packages arrive addressed to different women. When asked what’s in one of them the man shrugs and says, “Maybe food?” He insists that he will pay for it but usually “just forgets.”

The MOUPN started compiling a database of mail-order miscreants in 2009, using information provided by 80 sales agents. When a customer fails to pay for an item he or she ordered, the name and, more importantly, the address is recorded into the database, which is made available to member companies who can use it to check orders before they are sent out.

The NPO showed Asahi one example of a man who ordered 17 items from 5 sales agents over a 29-month period valued at ¥134,000 in total, and never paid for anything. MOUPN now has less than 5,000 people on the list.

The Individual Data Protection Law, which safeguards consumer privacy, does not apply to lists of consumers that have less than 5,000 names on it, which means MOUPN can share this information publicly. If there were more than 5,000 names, it would be against the law. Also, member companies have to mention in the “terms and conditions” notification on their home pages that names and addresses of customers will be given to MOUPN in the event that payments are not made.

Of the 500 companies that belong to the Japan Direct Marketing Association, 181 have reported outstanding unreceived payments, which are normally recorded as losses at the end of the year. These unpaid bills amount to about ¥20.3 billion, which is only 0.37 percent of the ¥5.5 trillion in revenues all members companies bring in.

As one customer service manager told the Asahi, “It’s difficult to separate customers into bad people who intentionally don’t pay and those who for whatever reason don’t pay on time or can’t pay.” The losses from non-payment are not large enough to discourage these sales agents from using the post-payment system, which is a kind of promotional device, since many potential customers don’t have credit cards and it’s often inconvenient to get to a post office or bank to make a payment transfer (though they’ll have to do it eventually).

The fact is, this sort of ato-barai (post-payment) system probably only works in Japan. Anyone who has traveled through agricultural areas has certainly come across unmanned farm stands where produce is laid out unattended and buyers simply leave money in a coin box.

The confection maker Glico has a sales system where it leaves a box of products in an office along with a small frog-shaped coin box. Office workers take the snack they want and leave the payment in the box. There is no in-office monitor or collector. A Glico representative simply shows up periodically to refill the box and collect the change. It’s a hugely successful system. So far this year, Glico says it has made ¥5.8 billion with the system, a 30 percent increase over the same time period last year. The company got the idea from the okigusuri tradition, in which manufacturers left boxes of medicines outside the homes of rural people, refilling them every six months and collecting the money the family deposited for the medicines.

The honor system has a long history in Japan simply because people tend to be honest.

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3 Responses

  1. Post-payment systems are very common in Finland too. Many times there is no need to pay anything beforehand and the product is delivered with a bill. Same applies to few immaterial services also.

    Finnish people have a reputation of being very honest and straight forward.

  2. Honesty boxes do exist in other lands and cultures, you know. Honesty is not a peculiarly Japanese trait!

  3. The “unmanned farm stand” even exist in the USA. I have purchased from them more than once in the state of PA.

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