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From stricter e-commerce regulations to clearer liability standards, consumer laws are reshaping accountability across the region

Consumer protection and product liability laws in Japan

This article provides an overview of the regulations under consumer protection laws and product liability laws, highlighting what must be considered when engaging in business activities involving the sale of consumer products or the provision of services to consumers in Japan.

Consumer protection

Consumer Contract Act. This act invalidates provisions that unilaterally prejudice consumer interests in an agreement between a consumer and a business. Typical examples of invalid provisions are:

1. 1. Having consumers waive their termination rights;
   2. exempting the business from liability for any damages; and
   3. having the consumers pay an excessive penalty.

An amendment in 2022 introduced a rule that a provision partially exempting the business from liability damages is invalid if it does not clarify that it does not apply to damages due to the business’ willful misconduct or gross negligence. If conducting an e-commerce business for the Japanese market, review the terms of service of the e-commerce site.

Act against Unjustifiable Premiums and Misleading Representations. This act regulates:

1. 1. Advertisements;
   2. Premium or giveaway.
      Particularly for the advertisements, the Consumer Affairs Agency strictly regulates and aggressively imposes administrative measures and has recently strengthened its enforcement framework by introducing the surcharge system (2016) and direct penalties (2024).

Advertisements that give consumers the impression that the quality of products is much better than the actual quality are prohibited. For example:

1. 1. When using words such as “the highest grade” or “No.1”, confirm the reason for describing the product as “the highest grade” or “No.1”;
   2. When using claims about efficacy or effectiveness, confirm that the claims are substantiated by appropriate test results; and
   3. When using customer reviews in advertisements, select a sufficient number of samples at random.

Advertisements that give consumers the impression that the transactional conditions (e.g., price and after-sales service) are much better than the actual conditions are prohibited. For example:

1. 1. Be careful, especially when displaying a discount. Comparisons between the current sales price and a different price (e.g., past sales price) must comply with a strict rule. For example, a past sales price generally may be used only if the product was sold at that price for a period exceeding four weeks within the most recent eight weeks.
   2. Repeatedly holding a limited-time campaign for a long time is a typical violation of this act. While no criteria are specified to determine what period will be a “long time”, there is a case of an administrative measure that repeatedly holds a “one-month limited campaign” for six months.

In addition, this act also regulates bait-and-switch advertising and stealth marketing. On premiums or giveaways, the act provides criteria for the value of the premium or giveaway that can be provided to consumers.

Act on Specified Commercial Transactions. This act regulates e-commerce businesses. A foreign business that sells products or provides services to individuals in the Japanese market must be aware of the rules under this act.

1. 1. The act specifies information that must be displayed on advertisements (e.g., the product detail page) and the checkout page, such as contact information, the name of the person responsible, and cancellation conditions.
   2. In addition, this act also prohibits attempting to make a customer place an order unintentionally (e.g., when clicking a button places an order, but the button is labelled “next” or “send” and so the customers cannot be aware that such a button places an order), sending a marketing message without customers’ prior consent, and exaggerated advertisements.

Act on Regulation of Transmission of Specified Electronic Mail. Sending a marketing message is regulated not only by the Act on Specified Commercial Transactions, but also by the Act on Regulation of Transmission of Specified Electronic Mail. This act provides for the opt-in rule and certain information that must be displayed in a marketing message (e.g., a URL or email address for opt-out).

Product liability

Product Liability Act. If a product has a defect in its manufacturing, design or warning instruction, and that defect causes damage to life, body or property other than the product itself, the manufacturer or importer has strict liability for the damages. Even if the customer misuses the product, the manufacturer or importer who fails to display a necessary warning on the product label is liable for the damage. Note that a seller who does not manufacture or import the product is not liable under this act.

Acts that require the display of certain information on products to provide consumers with information appropriately. There are acts that require the display of certain information on products to provide consumers with information. For example:

1. 1. Food Labeling Act;
   2. Pharmaceuticals, quasi-pharmaceutical products, cosmetics and medical devices: Act on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices;
   3. Textile goods, plastic goods, electrical appliances and apparatus, and miscellaneous manufactured goods: Household Goods Quality Labeling Act; and
   4. Alcoholic beverages: Act on Securing of Liquor Tax and on Liquor Business Associations.

Acts to ensure product safety.

1. 1. The Consumer Product Safety Act, the Electrical Appliance and Material Safety Act, the Gas Business Act, and the Act on the Securing of Safety and the Optimisation of Transaction of Liquefied Petroleum Gas. To ensure product safety, these acts require manufacturers or importers of specific products to submit notifications, undergo inspections for compliance with technical standards, and display a mark known as the PS (product safety) mark.

While a seller is not liable for notification or inspection, it cannot sell a product without the PS mark. Amendments to these acts will be effective on 25 December 2025. The key amendments are:

1. 1. 1. Products for children under the age of three years will be regulated by the Consumer Product Safety Act.
      2. For cross-border e-commerce, a foreign seller must appoint a “domestic manager” who is liable for the recording obligation of the inspection result, reporting obligation to the regulatory authorities, etc., as a representative in Japan of the foreign seller. (The appointment of the domestic manager is an obligation under the Electrical Appliance and Material Safety Act, and optional under the other three acts.)
   2. The Food Sanitation Act. This act provides standards that must be followed regarding foods, food additives, apparatus, containers and packaging for foods and toys for children under the age of six years. The recent amendment introduced a positive list system for containers and packaging made of synthetic resin.

Under Japanese law, businesses that provide goods or services are subject not only to general advertising and labelling regulations, but also to a wide range of rules for conduct that could unduly influence consumers’ rational decision-making regarding products or services, such as restrictions on the offering of premiums and prizes, and regulations on the transmission of marketing emails.

In addition, depending on the type of product, businesses may be required to provide consumers with specific information, as well as complying with general labelling requirements. Furthermore, it is important to note that businesses are subject to strict liability concerning product safety under the Product Liability Act and related laws.

Accordingly, when providing products or services in Japan, businesses must ensure full compliance with these legal and regulatory requirements.

CITY-YUWA PARTNERS
Marunouchi Mitsui Bldg, 2-2-2 Marunouchi
Chiyoda-ku, Tokyo 100-0005, Japan
Tel: +81 3 6212 5500
Email: cy-info@city-yuwa.com

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Taiwan laws protecting consumers, covering product safety

To safeguard consumer rights, Taiwan enacted the Consumer Protection Act (CPA) in 1994. The CPA, most recently amended in 2015, serves as the principal legislation governing product liability. As Taiwan has not passed standalone legislation on product liability, product liability issues are addressed in chapter 2, section 1 (Health and Safety Protection) of the CPA, and apply only where a consumer relationship exists.

Product liability claims

Under the CPA, the term “consumption” refers to “final consumption”, namely, the use of goods or services not intended for further production or commercial exploitation. A “consumer” is any person who, in relation to a commercial practice, acts for purposes of consumption in transactions for goods or services.

In terms of interpretation of the rights holder, the scope may encompass third parties; however, such third parties are limited to those who can be reasonably foreseen by the manufacturer as potential victims of harm resulting from unsafe goods or services.

Although the CPA does not explicitly limit consumers to natural persons, prevailing theories and practice hold the view that legal persons may, under certain circumstances, engage in consumer activities and thus qualify as rights holders. For example, a company may be deemed a rights holder under a consumer dispute when leasing vehicles for an employee’s trip.

Nevertheless, transactions conducted between business entities for non-consumptive purposes do not constitute consumer activities and are therefore excluded from the application of the CPA.

Product liability is also governed by the Civil Code, specifically the provisions on tort liability (articles 184 to 198) and contractual liability (articles 227 and 360). Particularly, the 1999 amendment to the Civil Code introduced article 191-1, which establishes product manufacturer liability under tort law. Accordingly, even when a consumer relationship is absent, an injured party may still pursue damages based on tort liability (usually under article 191-1) or contractual liability (under the Civil Code).

The CPA, on the other hand, governs product liability in the context of consumer products, where such product liability constitutes a civil liability for special tort. In cases where both the Civil Code and the CPA are applicable, the consumer may seek compensation under either or both legal regimes.

Product liability proof

Product liability regulated under the CPA is subject to a strict liability standard known as liability without fault, or risk liability.

According to article 7 of the CPA: “Business entities engaging in the design, production or manufacture of goods, or in the provision of services, shall ensure that the goods or services provided meet and comply with the contemporary technical and professional standards with reasonably expected safety requirements when placing the goods into the stream of commerce, or at the time of rendering services.”

When a product causes damage to the lives, bodies, health or properties of a consumer or third party, the courts will assess factual elements such as whether the product lacked safety, and whether there exists a causal link between the safety defect and the damage (i.e. the causation necessary to establish liability) when determining whether the business entity shall bear product risk liability under article 7 of the CPA.

Regarding the allocation of the burden of proof on the issue of product safety, article 7-1 of the CPA expressly provides: “Business entities shall bear the burden of proof where it is claimed that the goods or services provided meet and comply with the contemporary technical and professional standards of reasonably expected safety requirements when placing the goods into the stream of commerce, or at the time of rendering services.”

Hence, if the consumer has established that the product was used according to a reasonable method, yet the consumer still suffered damage, the burden then shifts to the product manufacturer to prove the product’s safety.

Concerning the allocation of the burden of proof related to the causation necessary to establish liability, Taiwan’s Supreme Court held that the CPA implements a strict liability regime, relieving the consumer from proving intent or negligence of the business entity. Nevertheless, the consumer still needs to prove that a reasonable causal relationship exists between the product’s lack of safety and the damage suffered.

The courts may consider factors such as the relative financial and professional resources of the parties, their respective access to information, the difficulty of providing evidence, and evidentiary asymmetry, and may accordingly reduce the consumer’s evidentiary burden or shift the burden of proof pursuant to article 277 of the Code of Civil Procedure.

In contrast, the product manufacturer’s liability under article 191-1 of the Civil Code, which stipulates the liability of product manufacturers, remains subject to a fault-based standard.

Such a provision presumes the manufacturer’s negligence, the product’s lack of safety, and that the damage is causally linked to the product when damage arises from the ordinary use or consumption of the product. In other words, the manufacturer bears the burden of proving the absence of negligence, the conformity of the product to safety standards, and the absence of a causal nexus between the product and the damage.

Product recalls insurance

Pursuant to article 7 of the CPA, business entities are obliged to ensure that the goods or services they provide conform to the contemporary technical and professional standards with reasonably expected safety requirements.

Where evidence indicates that goods or services available on the market present risks to consumer safety or health, business entities are required to recall or discontinue the provision of such goods or services to prevent or mitigate harm to consumer rights and interests.

The CPA delineates distinct mechanisms for both voluntary recalls (or service discontinuation) initiated by business operators (see article 10 of the CPA) and mandatory recalls (or service suspension) imposed by competent authorities (see articles 36 to 38 of the CPA). Furthermore, the CPA prescribes administrative sanctions for non-compliance, including the imposition of fines and orders to cease operations.

In addition to the obligations set out in the CPA, business entities may, either voluntarily or pursuant to specific regulatory requirements, procure product liability insurance to mitigate the risk of compensation claims arising from damages suffered by consumers or third parties as a result of product defects.

AI products

In recent years, artificial intelligence has been extensively integrated into goods and services. Civil liability arising from damages caused by defects in AI products primarily encompasses user liability and producer liability. The former can be pursued through general tort liability provisions under the Civil Code, such as asserting civil tort liability against the driver of an autonomous vehicle.

The latter applies the relevant business entities’ liability under the CPA and the product manufacturer’s liability under the Civil Code. Business entities may be presumed to have failed to meet the safety standards reasonably expected, given the prevailing technological standards at the time, potentially incurring strict liability or presumed negligence liability. For example, claims may be asserted against the designers or manufacturers of autonomous vehicles under article 7 of the CPA and article 191-1 of the Civil Code.

Conclusion

As AI products become increasingly prevalent, disputes concerning product liability are likely to increase. Business entities should prioritise ensuring product safety and establishing robust mechanisms for emergency recall or disposal. Furthermore, business entities are advised to make prudent use of risk mitigation tools such as product liability insurance to address potential legal risks arising from the strict liability provisions under the CPA and the manufacturer liability provisions under the Civil Code.

Lee and Li, Attorneys-at-Law
8F, No.555, Sec 4, Zhongxiao E Rd
Taipei 110, Taiwan
Tel: +886 2 2763 8000
5F, Science Park Life Hub
No.1, Industry E 2nd Rd
Hsinchu Science Park, Hsinchu 300, Taiwan
Tel: +886 3 579 9911
Email: attorneys@leeandli.com

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