What makes you say that? This is not illegal in Japan. At least most Japanese courts don't seem to think so.
As for the newspapers reporting it, are you kidding? Even with all the work that Debito has been doing about these issues, you don't see the newspapers reporting something like this as news even though there are many examples of these "single, isolated incidents".
http://www.debito.org/roguesgallery.html
I assume you've heard of Debito's Otaro lawsuit. Even though he has been refused entry to an onsen after he became naturalized Japanese, you still don't see any outrage. He makes the news occasionally but only because he is litigating the case.
http://www.debito.org/otarulawsuit.html
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