An Insurance Scam Taps Japan’s Fears At Great Expense


Victims Pay After Receiving
Calls About Fake Mishaps;
The Dread of Humiliation
‘Dummy! It’s That Swindle’
May 6, 2005; Page A1
TOKYO — Eizaburo Murata, a 76-year-old retired school principal, was reading at his Tokyo home a year ago when the phone rang.
“It’s me! It’s me!” wept a muffled male voice. “I’ve been in a car accident!” Mr. Murata says he couldn’t hear the voice clearly but immediately feared something had happened to his only son, Toshiyuki, a 46-year-old convenience-store manager who lived with him. “Is that you? Is that my Toshi?” he recalls frantically asking.
Then another man came on the line, claiming to be from a major insurance company. He said the son’s car had struck a luxury sedan belonging to a real-estate agent. The damages totaled about $50,000, but the driver would accept $30,000 and forgo legal action if Mr. Murata could provide the sum, in cash, within two hours. Mr. Murata agreed, hoping to end the matter quickly and quietly.
The only thing that stopped Mr. Murata was a bank employee who said the request might be part of a scam. Mr. Murata didn’t transfer the money. When he returned home, he found his son napping on the living-room carpet after an uneventful night shift.
“When I saw my son, it was as if a spell had been broken,” Mr. Murata says.
Many Japanese haven’t been as fortunate. This nation, which boasts a low crime rate, is in a panic about a scam in which criminal groups act out highly orchestrated dramas over the phone. The crime has become so widespread it even has its own name: the oreore (pronounced oray-oray) sagi, or, “It’s me! It’s me!” swindle . Most scams include a crook pretending to be a relative, sobbing, “It’s me!” hoping the intended victim lets a name slip.
Since the scam first started appearing two years ago, the number of cases has skyrocketed. Last year, at least 14,874 victims handed over about $180 million, police officials say. Other incidents are believed to go uncounted because victims are too ashamed to report the crime. The single biggest reported loss was a man who paid $120,000.
Similar scams have appeared in other countries. But they are particularly elaborate — and successful — here because of a schism between Japan’s traditional ways of settling disputes and a recent push to create a more transparent, contract-based legal system.
For most Japanese, Western law remains an alien notion. Many retain a deep-seated reluctance to resolve disputes in public and prefer to settle matters behind closed doors to avoid shame to the family. In Japan , a nation of 127.6 million people, there were 570,000 civil lawsuits last year, fewer than the 720,000 in the U.S. state of Georgia, which has 8.6 million people.
But in recent years, Japan has tried to adopt American-style legal and business practices as a way to tackle economic stagnation. The Japanese government has taken steps to increase the number of lawyers, create a jury system and beef up its contract law. Disputes between companies are increasingly being settled openly in court.
One reason the oreore scam works is because it targets the intersection of these two currents. As the chances increase that a Japanese might have his dirty laundry displayed in public through the courts, people here are going to extreme lengths to avoid the legal system, even if it means paying huge sums for a quick, quiet settlement.
“Americans would start thinking about their rights, and probably consult a lawyer,” says Tatsuya Kimura, an Osaka-based lawyer who has represented consumers against Japan’s powerful organized-crime syndicates. “Japanese aren’t thinking about their rights. They’re only thinking about how to keep problems from coming out in the open.”
Mr. Kimura says his own wife, Michiko, almost fell victim to the scam three months ago and was on her way to the bank when she called him. “Dummy! It’s that swindle I’ve been working on!” he recalls reprimanding her.
Another reason for the oreore scam’s ubiquity is Japan’s reliance on cash. Because of the country’s anemic stock and property markets, Japanese often keep savings in the bank or even piles of cash at home. What’s more, most financial transactions are done electronically, giving victims little time to reconsider and halt a payment.
Typically, oreore swindlers work in teams, often under control of Japan’s yakuza crime syndicates, police say. They perform elaborate ruses with characters including a “policeman,” a “lawyer,” or another authority figure who claims to be at the scene of the accident, usually a car crash. In some cases, the crooks are equipped with personal information, such as the name and age of a son or cousin.
The victim is told the relative could face criminal charges unless a settlement is paid to the other party, often a pregnant woman who suffered a miscarriage from the crash. The crooks send the victim into a panic by bombarding him with multiple phone calls. It’s often hours or even days before the victim realizes he’s been duped, by which time the money is long gone.
This happened to Mr. Omuro, a retired salesman in his mid-60s living in suburban Tokyo. He asked that his full name not be used for fear of humiliation. Mr. Omuro says he has told only his wife, son and police what befell him.
“I don’t want everyone in the neighborhood whispering behind my back about what an idiot I am,” he says. Despite the frequency of the scam, victims typically request that their names don’t appear in the press.
Mr. Omuro says a similar fear of shame drove him to hand over $30,000 last spring. In a familiar pattern, he says a weeping voice came on the phone claiming to be his 28-year-old son. Then an “insurance inspector” came on the line saying his son had hit a Mercedes Benz. Mr. Omuro says he called his son’s cellphone, but received no answer. (It turned out his son wasn’t carrying it that day.) Mr. Omuro rushed to his bank and made the transfer.
When he got home, the phone rang again. The “insurance inspector” said the money had arrived and said the Mercedes owner wanted an additional $10,000 for more repairs. Mr. Omuro dutifully went to the bank and made the second transfer. Only when his wife called did he come to his senses. “Isn’t that the oreore swindle ?” he says she asked. Mr. Omuro says he was able to freeze the second transfer but the money from the first was gone.
Mr. Omuro was duped despite knowing about the scam from watching television. “Everything changes when the voice on the phone is your own flesh and blood,” he says. He recalls becoming panicked. His only thought was how to settle the accident without it becoming public. “I didn’t want it to go to court because I had the family reputation to protect,” he says.
The group that swindled Mr. Omuro has never been caught, say police, who admit to making little progress in general because scam artists buy prepaid cellphones and use bank accounts under false names, making them hard to find. “The criminals don’t leave any tracks,” says Yasushi Takahashi, an inspector at the National Police Agency who has investigated oreore swindle cases.
Mr. Takahashi says the groups are organized and disciplined. One recently broken up in Tokyo had a “president” who presided over “group bosses,” “branch managers” and “employees.” In another, high-earning employees won a trip to a tropical resort. Police found manuals published by the scammers. One suggestion: have the “lawyer” disorient victims with legalese. One group even ran an acting school, according to the National Police Agency.
Police say scam artists remain a step ahead of the law by inventing new tactics. A new character recently started making an appearance: a “reporter” who calls with threats to publicize the accident.
Crooks have also started targeting new groups, such as parents of doctors or nurses. In these calls, they threaten malpractice suits by claiming a treatment error killed a patient. Another target: middle-aged housewives, who are often particularly concerned with family reputation. In the beginning, most victims were retirees.
Reacting to public outcry, Japan’s parliament in December clamped down on a flourishing trade in bank accounts — in which people sell their account details to criminal groups — making it harder for scam artists to work anonymously. It is also considering a law requiring ID to buy cellphones. Lawmakers say it’s too early to see if the new measures will make a difference. “The criminal groups are tricky,” says Yoshihide Suga, a Liberal Democratic Party lawmaker who has led the drafting of the new laws. “They’re always hatching new ways to fool people.”
Police have resorted to staging re-enactments of how the swindlers operate. Tomato Bank in Okayama flashes a big red warning on its ATM screen before every transfer. Lawyers — real ones — advise families not to let any single member have control of household assets. One local government even hired a group of grannies to perform a TV spot. After a caller says, “It’s me! It’s me!” one gray-haired woman demands: “Who are you?”
Mr. Murata, the retired principal, says only his bank saved him from losing his money. Mr. Murata says the call about his son’s supposed crash made him think of only thing: how to solve the problem. “I didn’t think about my rights or the law,” he says.
He needed to borrow money to pay the entire sum. A bank employee asked what the money was for. When Mr. Murata explained, the employee asked him to go home and reconsider. Other bank employees crowded around. “It’s got to be the oreore scandal,” they said, Mr. Murata recalls. He took their advice and found his son at home. “What accident?” the son asked.
“I had heard of the scandal, but I assumed it could never happen to me,” Mr. Murata says. “But when I got the call, I just felt apologetic and wanted to set things right for the other party. That’s the Japanese way.”

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