Sleazy guarantor brokers prey on the desperate


"I paid 50,000 yen, but they didn't find me a guarantor."

Among the new businesses spawned by the so-called "muen shakai" (indifferent or unsupporting society) are "hinkon" businesses appealing to people who subsist below the poverty line. These include Internet cafes with private cubicles where one can spend the night, and apartments that waive key money deposits.

Yet another growing business has been "hosho saabisu," brokers that offer to introduce guarantors needed to lease an apartment or find work. Consumer claims against such operators, reports Takarajima (December), have been increasing rapidly.

The National Consumer Affairs Center of Japan reported the number of complaints in 2009 (the latest year for which figures are available) reached 209, nearly double the number of the preceding year.

Take the Tokyo man in his 30s who required a guarantor in order to obtain a contract as a regular company staff member.

"If my parents had still been living, I would have used them, but they passed away, and I couldn't ask other relatives, as we don’t get along well," the man explains. "Then I found the website of this guarantor service and since I was grasping at straws, I contacted them."

The service accepted payment but could not come through with a guarantor. The man was unable to join the company, and the service refused to refund his money. Instead, they called him numerous times to demand additional "contract renewal" payments.

"They're just taking advantage of weak people who lack guarantors," the man says. "They're no different from swindlers."

A man in Tohoku had the annual contract for his factory job guaranteed by an uncle for 10 years. But although the uncle passed away, the company was unwilling to waive its requirement of a guarantor -- despite the man's unblemished 10-year work record.

A guarantor, a brokerage he found on the web told him, would cost 60,000 yen for six months, or 100,000 yen for a year. After the man sent the first payment, the service sent him his "guarantor's" name and address, but no letter of guarantee bearing the man's "hanko" (personal seal) arrived.

Takarajima's reporter set out to trace the guarantor and investigate what happened. The "guarantor" turned out to be a man in his 50s in Gunma Prefecture, who told the magazine that he had provided his name and other personal data to the guarantor service two years ago, but immediately had second thoughts about the wisdom of such an arrangement. "I decided to back out before the deal went through," he says.

But the cancellation was not enough to deter the service from using his name and address as bait to swindle a man in desperate need of a guarantor.

The guarantor service -- which claimed on its website that it boasted 43,000 customers -- was tracked down to a former dry cleaning shop located 40 minutes by car from Fukuoka Airport in Kyushu.

When confronted with the details of the Tohoku man's woes, the proprietor of the service told the magazine, "When contracting our services, we never make a 100% assurance that we can provide a guarantor." As for claims over the use of the man in Gunma without permission, the proprietor doggedly insisted "Such a thing could never happen."

"Temp-help jobs and other types of irregular employment have been increasing," says Keisuke Sakai, a attorney who has dealt with such cases. "Such workers move from one employer to the next, and they often face unstable income that inevitably requires them to move their residence, so more situations arise in which they require a guarantor. But for the same reasons, guarantors become increasingly difficult to find.

"These brokers are extremely malicious businesses out to exploit disadvantaged people," Sakai adds.

As for those who agree to be guarantors, the risks may outweigh the advantages. During fiscal year 2009, a certain Mr C received 387,950 yen in payments for acting as a guarantor. Unfortunately, out of 10 people he guaranteed, four of them defaulted on rent payments; he was sued to make up for the shortfall.

The brokers, it seems, rake in all of the profits, while assuming none of the risks.

So why don't government agencies take more decisive action to discourage such abuses? Despite increasing requirements for guarantors for everything from rental leases to private school and rest home admissions, the laws remain mired in a section of the civil code that went into force in the 29th year of Meiji -- 1896.

© Japan Today

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Instead of cracking down on abuse by guarantor companies, why don't they regulate what kinds of services and what situations can require a guarantor? It gets rather ridiculous at times. A friend of my husband owns a successful business and has a sizeable income, but his parents died when he was young so he has nobody to act as guarantor for him when renting an apartment, which means he is limited to living in places that don't require one, like cheap student housing and Leopalace. He'll never get a bank to give him a mortgage either, although in a few years he'll have enough money to pay for a house with cash.

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This guarantor system is outdated and biased. I'll never understand how mature men and women in their 30s need a guarantor. Sure, there are people who are irresponsible but there must be other ways to deal with them.

Why not take a page from credit card companies. Everyone starts off with 0 credit and as they show that they are trustworthy, their credit builds up. Any act that destroys that trust gives them negative credit.

When renting apartments, getting loans, etc. this report reflects on their risk assessment and they pay accordingly. People with little or no credit will ultimately have to pay more unless they provide their own guarantor. The extra that they pay will go to insurance in case they default on the loan.

Meanwhile, people who default on loans should ultimately be responsible for their own actions. If someone runs out on a house, they should be responsible for that. People with higher 'flight' risks such as foreigners may have to accept that they will need to pay higher premiums.

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I suggest your well-off friend ask you. A friend is just as good as a relative. I'm the guarantor for a friend and I'm not even Japanese. I think realtors and landlords just need a piece of paper hanko-ed with 保証 typed on the top. I even know of a foreigner who is the guarantor for his wife so she could get a loan to buy a house - the bank wouldn't loan to a foreigner. Go figure.

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This whole Guarantor system they use here is ridiculus and should be overhauled, something along the lines of what jonobugs suggested would work better. Surely the Japanese can see how antiquated this system is?

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I never realised that a guarantor could be required for a job. But it seems strange that the Tohoku man has been on annual contracts for ten years: I thought three years was the maximum before a job became permanent?

The whole practice should be outlawed and landlords etc should rely on references and take on the risk of default themselves, or by buying insurance.

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From the enviable shinjinrui generation to muen shakai of today, how very predictable this short evolution of the Japanese society.

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Redo the entire rental system, key money is illegal in most countries.

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"I'm the guarantor for a friend and I'm not even Japanese."

Borscht, bear with me, what are the responsibilities of a guarantor, please?

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It seems that Japanese have endless scams to scam each other, and the law doesn't seem to mind.

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If the person you're guaranteeing does something like skip out on a huge bar tab or skip town without paying rent for a few months, you're responsible and should pay. If they skip out on a bank loan, I suppose you'd be the person the bank yelled at until they could either sell the property or you'd start paying on the loan. If they get arrested for murder I don't know what the guarantor is supposed to do, however.

It seems to me, however, to be like a who-to-call-in-case-of-emergency thing. A guarantor for a job seems to be a who-to-call-when-they-steal-office-supplies thing.

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Borscht, thanks!

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I wonder who was the guarantor for my purchase of my mansion? Not married any more, so what gives?

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This system of needing a guarantor for everything is nonsense. Having a stable job and income should be the only guarantor you need. The system is broken and needs to be fixed.

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But its the Japanese people that have to stand up and say enough is enough. Japanese tend not to ask why or any questions at all. Japanese are programmed to say Hai Wakarimashita, Shoganai, or Ah so desu ka. Foreigners will ask the questions who, what, when, where, why and let me speak to your manager. This is a huge frustration when you are married to a japaneses person. It also works to our advantage sometimes because most of the time we can get away with stuff that Japanese people cant. Gaijin dakara Shogani!

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If the person you're guaranteeing does something like skip out on a huge bar tab or skip town without paying rent for a few months, you're responsible and should pay. If they skip out on a bank loan, I suppose you'd be the person the bank yelled at until they could either sell the property or you'd start paying on the loan. If they get arrested for murder I don't know what the guarantor is supposed to do, however.

Where is the sense of personal responsibility? If someone defaults on a bank loan, then they should be the one who pays, not someone who is gurantor. Yes I understand the banks want their money, and they deserve the right to get it back if they loan it, but they should go after those who actually made the loan, not the person who guarnteed it. So, if I get a loan from a bank, and default, but the guarantor is on the hook, can I go and get another loan, with a different guarantor?

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guarantor system is baka especially when you already pay a large deposit.

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So why don’t government agencies take more decisive action to discourage such abuses? Why do grown men in their 40s need an "adult" to be a guarantor for their job? Why do renters have to pay key money?

BECAUSE THIS IS JAPAN! Stop Japan-Bashing, Takarajima magazine!

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the whole guarantor thing shud simply be made void, illegal starting Jan 1st 2011! The shear idiocy of it all, it defies any logic what so ever.

And this artcle talks about a guy LOSING HIS JOB because his guarantor passed away........... why on earth wud one need a guarantor to get a job......I have frankly never heard of this one.

The other thing is why cant the keystones just investigate all the fraud being committed & make arrests shud be very easy to nail these crooks

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Heart Corporation (the ALT bunch of jokers / criminals) require a guarantor for a job. I have never heard of any other place in Japan asking for such a thing.

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Yes, the guarantor thing is the root of many of the scams here. It was attempted on my wife a few years back with a fraudulent bill. She was told to pay up or they would harrass the family. It will never change because as mentioned people here will not step up and demand change. Hive mind dog eat dog system if I ever saw one. Every place has its problems but this is just incredible.

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The gaurantor system is way out of hand in Japan, but it's certainly not the only country that has it. Even in the USA you need a gaurantor to rent an apartment, get a mortgage, or have a credit card, until you build up your credit history. People don't realize this because as a student your parents will cosign (which is exactly what a gaurantor is), and right out of college you probably already have a credit history.

The only difference is in Japan you need it to have a job and everybody is treated as having no credit history for this purpose. That's hysterical.

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"I don't get it. So, you need a guarantor in order to get a job? And if you lose your guarantor you lose your job???? What the &%$# is that?"

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This system is straight out of a mental patients ward !! Why do these Japanese people even put up with half the crQp dished out to them , they just need to stand up and say politely please go away and have sex with yourself to the ones trying to impose these ridiuclus systems on them.

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My friend was required to have a guarantor when he got employed by a foreign company (and a big one) in Tokyo! he was completely shocked, and since he's a foreigner and no Japanese will even become a guarantor unless family tied, he asked me. I agreed, but then the company didn't accept it because I am also a foreigner, and I don't have PR.

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Par for the course, I had the same happen to me while in outher countries. Where you either need to proof got a valid return-ticket or have a person that will cover the ticket, etc.

And of course they won't accept someone that is on a similar visa as the applicant.

One company even asked my Japanese wife to attend the job-interview to check if there was a chance of splitting, etc.

Understandable from a goverment/company point of view, you don't want to end up with deadbeats who can't even get home.

My Estate-agentg and caretaker also agrees that the current guarantor-system is bad and prefers the overseas system where the landlord can change the locks and keep the goods inside.

In Japan the landlord has NO legal recourse till ONE year after the 1st payment defaulted.

So there need to be other systems to be put in place that will also protect the landlord.

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Zenny, the Japanese employes at that company also needed a guarantor. If you have your family it's ok, but if you're a foreigner in Japan, even if you did your undergrad and graduate studies here (as my friend did), it's very difficult to find a guarantor.

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100% agree, too many foreigners think it is only them that need a guarantor or are refused Credit Cards due to NOT having a credit history here.

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It's just a matter of time until there will be no need for guarantors and these brokers will go out of business.

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Another reason Japan is and will always be a third world society!

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I don't think any of you hit on the expense of it from both sides. The real problem Japanese people have is understanding risk, and it shows in how they deal with insurance. Their only rule is: more is better! And then everyone waits for that dismemberment so their ship will come in.

With guarantors, it is a catch 22. If someone can't find ANYBODY to be one, then yikes!! But the expense of paying a bunch of money to a company instead of the landlord is stupid.

Mr. Renter dude should just use his head and say to the landlord: look, I can get a guarantor for 6 man or whatever, but how about I just pay that to you?

If the market is fair, then the price should be right. Landlords are dumb not to do this. But I know that landlords geenerally do not want to deal with unpleasantness, money, etc. Fools.

It is exactly the same thing as a high interest rate credit card or something like that.

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