Big news. Really big news. Nova had on-the-spot inspections in Tokyo from METI with regards to suspected violations of trade laws. The suspected violations center around refund policies that refunded less than the expected amount to the student without clear reason for the reduction. This is particularly the case with cooling off refunds, which, by law, require the company to refund 100% of the amount paid if canceled during the initial “cooling off period” (this usually lasts a week or two after initial payment or contract signing). If found to be fact then Nova is up for some serious problems from penalties, short-term suspension of business, etc. etc.

How Nova’s system works… It sells super-sized English point packages (points are used to “pay” for classes) with some discount (looks good on the surface). The only problem is with this kind of deal there is little hope of anyone actually consuming all the points in the time limit (a lot of people drop out, have no time, can’t get the class times they want, move, die, lose interest very quickly, etc.).

The problem arises when customers want a refund on the unused portion of the points (or cancel during the cooling off period), as they do not get a full refund. Customers, once passive, have started to fight this policy. In one case a customer sought a complete refund for many unused points late in the contract period, took them to court and won 700,000 yen in 2003. Going to final decision is odd, because the law generally tends to be on the consumer side, just the process of law very time-consuming – so you would expect that a company would work to settle sometime between 1) realizing the plaintiff is going to take this the whole way and 2) final decision. Going to final decision means there is a precedent in future cases…

This lingering lurgy of unhappy clients has been simmering for a long time and slowly gaining heat as consumer protection laws change, and the average Japanese Joe discovers they can do more than walking away out of pocket.

METI Minister Amari said there appears to be many customer complaints. This is serious stuff kids.

Deathknell?
Unlike foreigners getting busted for drug possession (which is just a side-show) or making complaints, the METI inspection is getting major playtime in the newspapers and online. If METI decides Nova has indeed crossed trade law boundaries (and they don’t do raids for the sheer fun of it) then this could have major repercussions for the eikaiwa called Nova.

And Nova’s response… There was no wrongdoing.

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