“The Law Revision Has Failed”: The Unbearable Reality of Soaring Scout Kickbacks Driving Adult Entertainment Businesses to Despair

Sex-industry establishments lament the situation after the revision

“The law was revised, so they should actually crack down properly. What is the police doing?”

An executive at a major sex-industry group with establishments across Japan complains.

More than a year has passed since the revised Entertainment Business Law came into effect at the end of June last year, but people in the industry are increasingly saying that the revision was a failure.

Not only has the revision failed to produce the intended effect of cleaning up the industry, but the situation has apparently become worse than it was before the revision, making matters even more problematic. Some have even gone so far as to call it a law of the century in the sense of being exceptionally bad. At the heart of the criticism is the ban on scout-back payments introduced by the legal revision. The ban, they say, has produced the exact opposite effect.

A scout-back is a payment made by a sex-industry establishment to a scout for introducing a woman to the business. In recent years, it became a social issue that women who had accumulated large debts as a result of predatory romance-based sales tactics by unscrupulous hosts were being sent to sex-industry establishments through scouts and subjected to continued exploitation. In response, the Entertainment Business Law was revised to eliminate transactions between scouts and sex-industry establishments.

Among groups involved in scouting women for the sex industry are “Natural” and “Access,” which police have identified as anonymous and fluid criminal groups (Tokuryu), and authorities have stepped up efforts to crack down on them.

The ban on scout-back payments was intended to eliminate the flow of money to unscrupulous scouting groups by cracking down on sex-industry establishments. In reality, however, the amount of scout-back money flowing to scouting groups is reportedly increasing.

Sex-industry establishments continue paying scout-back fees

Following the legal revision, conventional scouting companies that were not Tokuryu groups stopped introducing women to sex-industry establishments. With a series of crackdowns on sex-industry establishments linked to scouting operations, it appeared to the public that the revision had been effective. The reality, however, is different.

“The main groups now able to supply women to sex-industry establishments are Tokuryu scouts that disregard the law, and new business dealings are increasing. Because sex-industry establishments cannot remain viable without introductions of women, they have no choice but to rely on Tokuryu groups. A situation that should never have arisen has taken shape. In Tokyo, more than half of establishments, and in Osaka, almost all establishments except those belonging to the two major groups, continue to do business with Tokuryu groups.” (The aforementioned executive of a major sex-industry group)

Despite being prohibited by law, the reason so many sex-industry establishments continue paying scout-back fees is that they are not being caught. For both sex-industry establishments and Tokuryu groups, the businesses and individuals arrested or prosecuted since the legal revision are merely the tip of the iceberg. Most cases come to light only through the rare circumstance of a sex worker employed at an establishment reporting the practice. Scout-back payments are made in cash, and the difficulty of tracing financial flows, such as payment records, also makes enforcement challenging.

Having rapidly expanded their share of the market, Tokuryu groups are increasingly demanding additional scout-back payments under the guise of advisory fees, and some sex-industry establishments are giving in to the pressure.

“The expansion of Tokuryu groups that continue their malicious scouting activities cannot be avoided, and legitimate sex-industry establishments will eventually be driven out altogether.”

“In a few more years, most of the profits from sex-industry establishments will flow to Tokuryu groups and be used for criminal activities.”

People in the industry are voicing their concerns.

Why sex-industry establishments value scouts

“There are major benefits to sex-industry establishments working with scouts. Through them, women interested in working in the adult-entertainment industry can learn about the industry and what the work entails, and for the women, scouts are easier to consult than the establishments themselves. They help dispel the women’s concerns.” (Owner of a local sex-industry establishment)

Using scouts saves establishments the effort of posting job advertisements or directly recruiting women. Scouts also promote the women’s strengths to establishments on their behalf.

“The biggest benefit is that they introduce high-quality women. If the number of companions who can attract a lot of repeat customers increases, sales will naturally improve. Having high-level companions appear in advertisements can also be expected to bring in more customers. If you cut ties with scouts, the opposite happens. Fewer high-quality women will join, and sales will decline.” (Manager at a well-known delivery-service adult-entertainment group operating multiple establishments)

The scout-back paid by the establishment managed by this manager is ¥30,000–¥50,000 per woman per month. For particularly popular women, the amount can reportedly reach around ¥100,000 a month. The payments continue indefinitely as long as the woman remains on the establishment’s roster.

“Previously, the going rate for introduction fees (scout-backs) was roughly 15% of a woman’s monthly sales. But in recent years, that has risen to nearly 20%. Since establishments cannot survive without a supply of women, I imagine most establishments feel they have no choice but to rely on scouts. In some cases, sex-industry establishments are also using the same encrypted apps used by members of Tokuryu groups.” (Executive at a consulting firm serving sex-industry establishments)

How to eliminate malicious scouting practices

Since the legal revision, Tokuryu groups have been the ones whose profits from scout-back payments made by sex-industry establishments have increased. At establishments that continue to pay the now-illegal scout-back fees, women who can earn money through Tokuryu scouting groups are attracted to the businesses, increasing the number of women on their rosters. As a result, customers are drawn to illegal establishments, while the scout-back payments flowing from those establishments to Tokuryu groups also increase, creating a vicious cycle.

How, then, can scout-back payments be eradicated when they have continued despite being prohibited by law?

“By actively cracking down on sex-industry establishments that pay scout-back fees.” (The aforementioned manager at a well-known delivery-service adult-entertainment group)

“Penalties should be strengthened, and the number of scouts prosecuted should be increased to enhance the deterrent effect against scouting activities.” (The aforementioned owner of a local sex-industry establishment)

“There is also the idea of imposing penalties not only on scouts and establishments, but also on women who obtain jobs through Tokuryu groups. This could be done by revising the relevant laws and regulations.” (Staff member at an industry association)

Within the adult-entertainment industry, there is now a strong demand to establish a system that enables establishments seeking to comply with the law to secure personnel continuously and reliably from sources other than illegal organizations.