I now live in Tokyo, Nyororin, and have also lived in Saitama and Kanagawa in the 11 years I have been in Japan. I used to be an eikaiwa teacher, and while it does little to improve your Japanese skills, one advantage of the job is that you speak to literally thousands of Japanese people over the years and really get to hear all kinds of opinions on all kinds of topics. I had a number of students tell me that they had heard that having a fan on at night may well be fatal. They didn't know if they truly believed it or not, but they weren't game to find out. Of course there are plenty of people (the ones with more common sense) who don't believe it at all. For every urban myth there are people who believe in them- otherwise they would never spread.

Iso 9001
 

28 deg. is the setting for A\C and 20 deg is the setting for heating, according to the ISO 9001, to save energy. My host family said the same thing. Buy a little fan for 1000yen by yourself. Use it at night and you may get a sore throat that is about it, tell them it is a cultural thing.

ISO 9000 - Wikipedia, the free encyclopedia

Strangely fan death coincided when there were several series of criticisms against over-using fans and air conditions since the mid-1990s. This is more like a prank-like media hype swaying away people from using them.

Man, I feel spoiled. I didn't know 28 degrees was the government recommended temperature for air conditioners. When I was studying abroad in Japan in '06, I lived in a dorm, and as such had access to an air conditioner/heater that I could use as much as I wanted. I usually had it set to 20 degrees whenever it was hot out. I have the same problem as the original poster, where if it's too hot at night time I simply cannot sleep. I felt kinda bad using all that electricity, but I sort of made up for it by rarely using the heater at all. I grew up in a pretty northerly climate, so I feel more comfortable in colder weather, and pretty miserable in hot weather. I still use the AC often in my own place now, but the temperatures in this part of Japan are milder than the rest of the country, so I don't need to use it as much as I did before.

It appears to be a rumor to support energy conservation.

But with terrible style of publicity. There is a good reason why average South Koreans will kill the big media companies sooner or later.