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For many years, customer information has been misappropriated at post offices across Japan in violation of laws and regulations. All the more because they are key local facilities that are familiar to the public, the organization as a whole must be made thoroughly aware of the need for legal compliance.
Japan Post Co., a member of the Japan Post Group, has revealed that post offices across the country have been misappropriating customer information from Japan Post Bank to create lists for marketing insurance products. Data on at least 1.55 million customers was misappropriated since February 2014, according to Japan Post.
Post offices are commissioned by two financial firms — Japan Post Bank and Japan Post Insurance Co. — to provide over-the-counter services, such as selling their products and services, and get commission fees. They are in a position to know the customer information of both firms.
Based on the lists created using this information, some post offices engaged in practices such as luring Japan Post Bank customers to events where they were given gifts, and pitched insurance products to them.
The Insurance Business Law stipulates that prior consent must be obtained from customers before financial information such as their account balances can be used to solicit them to buy insurance products. In this case, post offices did not follow that procedure, a clear violation of the laws and regulations. The management of Japan Post bears a heavy responsibility for overlooking this.
Prior to its privatization in 2007, the Japan Post Group operated its three businesses of postal services, savings and postal life insurance in an integrated manner. Using customer information was common practice, Japan Post said.
Because the privatization spun off each business into a separate company, it became a legal requirement to obtain prior consent from customers, even though the companies belong to the same group. However, the frontline workers continued to presume that obtaining consent after a customer came to the post offices was not a problem.
In the insurance industry, there has been a string of cases of unauthorized appropriation of customer information, and the Financial Services Agency is investigating these cases. Now that the Japan Post Group has been privatized, it needs to comply with the Insurance Business Law in order to compete fairly with other private companies.
In response to this problem, Japan Post intends to modify its system so that it will not be able to search Japan Post Bank’s customer information. The company said it will also refrain from insurance and savings sales activities that encourage people to visit post offices for the time being.
Japan Post raised its postal rates just this month to improve profitability after its postal business posted an operating loss for the second year in a row. The recent revelation of wrongdoing will put pressure on earnings. The company will pay a heavy price.
Similarly, the Japan Post Group fell on hard times in 2019 when Japan Post Insurance and Japan Post together engaged in improper sales practices, including aggressive solicitation of elderly customers, and it became a social issue.
Post offices, which number about 24,000 nationwide, are a form of infrastructure that supports people’s lives. They need to keep in mind that the trust of the public is a great asset.
