The company asked subcontractors to make 243 free modifications to VTuber videos and materials.
© Cover Company
Cover Corporation, the parent company of Hololive Productions VTuber management company, received advice and guidance from the Japan Fair Trade Commission (JFTC) on Friday for violating the subcontract law by having subcontractors make 243 gratuitous modifications to VTuber videos.
According to the JFTC, the company commissioned 23 companies, including 19 freelance workers, to produce videos, illustrations and other materials used in VTuber videos between April 2022 and December 2023, and allowed these companies to do so for free. A total of 243 revisions.
In addition, when the company asked 29 merchants to reprint the video, the company did not pay the fees on time. The payment arrears lasted for one year and seven months, with overdue interest totaling approximately 1.15 million yen (approximately US$7,495).
Cover Corporation has paid the price set at the time of ordering and overdue interest, and the JFTC has issued recommendations and guidance to prevent similar incidents from happening again.
Cover Corporation also issued a statement on the incident on Friday, detailing that the transactions advised by the JFTC were orders placed between April 2022 and February 2024, mainly for the creation of Live 2D and 3D models,”[that] Considerable inconvenience was caused to the contractor by requiring him to make excessive modifications or extend the project due to incorrect wording in the written order specifications and instructions.
The company further explained that during the period in question, the number of transactions managed by the company increased significantly due to the company’s rapid expansion. The company admitted this resulted in negligence and tardiness in dealing with contractors, as well as deficiencies in internal structure and staff training.
The company apologized to the contractor and all parties involved for any inconvenience caused and said all overdue payments and interest had been settled, but it would continue to provide updates on any matters as soon as possible.
Therefore, the company also stated that it is currently making improvements in various aspects, such as hiring new employees and modifying transaction processes, as well as internal structural reforms, including improving internal announcements during employee training.
Cover Corporation announced in March this year that it would establish Cover USA, its first overseas subsidiary in North America.
On November 1, a new Japanese law, commonly known as the Freelance Workers Act, will take effect, requiring business operators to clearly state the nature of the work when dealing with freelance workers.
Source: Cover Corporation website, Livedoor News
