Online Shopping in Germany

As e-commerce activities continue to proliferate globally, protecting online consumers' data, identity and confidence in using the Internet for their needs increases.

And, as Internet activity becomes the norm for many until-now “traditional” functions, nations are adapting traditional law to online society, and are doing it at different paces, in different layers, for their specific individual needs.

In at least one area dealing with e-commerce law designed to protect consumer interests, the United States ' typically a leader in e-commerce ' has caught up with European law with the recently passed Restore Online Shoppes' Confidence Act (“ROSCA”), which President Obama signed in December. (For more on ROSCA, see, “New Law Cracks Down On Deceptive Third-Party e-Commerce Practices,” in the February edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/27_10/news/154768-1.html.)

ROSCA curbs what is commonly known as post-transaction third-party marketing, in which consumers unwittingly enroll in “clubs” for which they also typically unknowingly pay monthly “membership” fees to companies with which a third-party marketer signed them up after a deliberate transaction. Such schemes have cost U.S. consumers many millions of dollars, and companies have been fined ' but only after consumers discovered, usually inadvertently, that they were being charged small monthly fees to their credit card. Under ROSCA, firms with which consumers deal directly are prohibited from transferring consumers' data without consumers' knowing consent.

But law in some European nations has addressed for some time points of transactional protection, online and off, that U.S. law has not.

In Germany, Europe's largest economy, most matters that ROSCA addresses were already governed by the German Civil Code, particularly with regard to consumer protection, under provisions addressing data-protection law and competition law.

Online shoppers in Germany are specifically protected by two mayor principles:

• Online shoppers can void sales or service contracts within two weeks of a transaction; and
• The general terms and conditions of contracts between commercial sellers and their customers are subject to special, content-related requirements.

Beside this, several other regulations that protect online shoppers and other customers have been in place for a while.

Voidance Right

In contrast to ordinary shoppers, who can physically check and examine the goods they intend to buy, online shoppers are provided with only pictures of the products and have to rely on the seller's description. The customer's lack of a testing possibility is compensated for by the customer's right of voiding the sales (or service) contract concluded via Internet (or telephone or mail) within two weeks.

The two-week period for voiding the contract regularly begins when the commercial seller or service provider informs the consumer of his or her voidance right, but in no case prior to the delivery of the products. As a result of the voidance right, the consumer has two weeks' time to test and examine the products at home; within the two-week period, the consumer can void the contract by sending back the products to the seller. The seller bears the shipping cost for the return if the purchase price of the products exceeds an amount of 40 Euros.

For commercial sellers or service providers, it is essential to inform their customers of their voidance right; if the seller or service provider fails to comply with these information duties or if the information is incorrect, then the voidance period does not start to run and, as a result, customers have an indefinite span of time in which they can void the contracts. Also, if the seller informs the customer only after the contract has been concluded, then the voidance period lasts four weeks instead of two weeks. The right to rescind the contract extends to any financing contracts that the consumer concluded simultaneously (online, by mail or by phone) with the sales contract.

The voidance right, which is generally known and quite popular, awards a generally accepted level of protection ' if the seller is located in Germany and is available. If payment has been effected in advance and the seller is not discovered, then these rights may not be enforceable. No duties to post bonds or in other ways deliver security that is imposed on the participants in Internet transactions are in place.

General Terms and Conditions

Under German law, it is a general principle that all contractual conditions must be agreed on for the conclusion of the agreement. This applies to general terms and conditions as well, irrespective of whether the agreement is concluded online or in a bricks-and-mortar shop. General terms and conditions of agreements, therefore, and in particular the price, have to be disclosed to the customer prior to the conclusion of the agreement for them to be incorporated in the contract. To ensure that terms and conditions are incorporated, it is common, but not required, that during the ordering process, online shoppers must visit a special Web site where they can read the terms and conditions, and/or confirm having read and agreed to the terms and conditions by clicking a box on the seller's Web site.

Terms and conditions will not be enforceable if they are unexpected, non-transparent, ambiguous or surprising, which, e.g., may be the case because of their layout or the layout of the Web site. In particular, an offer of allegedly “free services” with a hidden note regarding the subscription with recurring payment obligations somewhere on the Web site can be deemed surprising. Hiding prices also violates competition law and ' subject to German case law ' can be regarded as a criminal offense (fraud).

In individual agreements as well as in terms and conditions, commercial sellers offering their products to individuals as customers are prohibited from deviating from the statutory sales-warranty provisions; specifically, a reduction of the two-year limitation period is prohibited (for used products a reduction to one year is possible).

Other Aspects of Online Commerce

Besides the aforementioned aspects, consumers are protected by several other provisions, e.g., by the Federal Data Protection Act. This Act prohibits transfer of payment details from seller to seller without the prior (written) consent of the customer or without good cause. Making online commerce easier will not justify the transfer of payment details, especially if such payment data transfer is used to disguise further payment obligations on the part of the customer.

Commercial sellers or service providers are obliged to inform customers about some enumerated details; inter alia, seller and service providers have to disclose their identity by publishing an imprint on their Web pages with full address. Furthermore, all ancillary costs such as shipping and taxes have to be indicated. This information, as well as the general terms and conditions, have to be made available to customers in text form, which means that the information must be printable/saveable. It is quite usual that, after conclusion of the contract, commercial sellers or service providers send an e-mail to their customers containing all relevant information, including terms and conditions.

Violation of provisions of general terms and conditions can partly be regarded specifically as violation of competition law. Income of fraudulent online service providers violating competition law can be seized. With regard to e-commerce, sellers or service providers violate competition law if they publish false or misleading information regarding offered products or rendered services, and price, e.g., such as when some ancillary costs are indicated only by an asterisk.

Enforcement

In case a (online) seller violates the regulations of the terms and conditions, or other consumer-protection provisions, consumer-protection organizations are entitled to file an action for injunction.

But even though online shopping in Germany is protected by a range of statutory provisions, effective enforcement, as in other parts of the world, remains a challenge to enforce these rights.

As e-commerce activities continue to proliferate globally, protecting online consumers' data, identity and confidence in using the Internet for their needs increases.

And, as Internet activity becomes the norm for many until-now “traditional” functions, nations are adapting traditional law to online society, and are doing it at different paces, in different layers, for their specific individual needs.

In at least one area dealing with e-commerce law designed to protect consumer interests, the United States ' typically a leader in e-commerce ' has caught up with European law with the recently passed Restore Online Shoppes' Confidence Act (“ROSCA”), which President Obama signed in December. (For more on ROSCA, see, “New Law Cracks Down On Deceptive Third-Party e-Commerce Practices,” in the February edition of e-Commerce Law & Strategy, at www.ljnonline.com/issues/ljn_ecommerce/27_10/news/154768-1.html.)

ROSCA curbs what is commonly known as post-transaction third-party marketing, in which consumers unwittingly enroll in “clubs” for which they also typically unknowingly pay monthly “membership” fees to companies with which a third-party marketer signed them up after a deliberate transaction. Such schemes have cost U.S. consumers many millions of dollars, and companies have been fined ' but only after consumers discovered, usually inadvertently, that they were being charged small monthly fees to their credit card. Under ROSCA, firms with which consumers deal directly are prohibited from transferring consumers' data without consumers' knowing consent.

But law in some European nations has addressed for some time points of transactional protection, online and off, that U.S. law has not.

In Germany, Europe's largest economy, most matters that ROSCA addresses were already governed by the German Civil Code, particularly with regard to consumer protection, under provisions addressing data-protection law and competition law.

Online shoppers in Germany are specifically protected by two mayor principles:

• Online shoppers can void sales or service contracts within two weeks of a transaction; and
• The general terms and conditions of contracts between commercial sellers and their customers are subject to special, content-related requirements.

Beside this, several other regulations that protect online shoppers and other customers have been in place for a while.

Voidance Right

In contrast to ordinary shoppers, who can physically check and examine the goods they intend to buy, online shoppers are provided with only pictures of the products and have to rely on the seller's description. The customer's lack of a testing possibility is compensated for by the customer's right of voiding the sales (or service) contract concluded via Internet (or telephone or mail) within two weeks.

The two-week period for voiding the contract regularly begins when the commercial seller or service provider informs the consumer of his or her voidance right, but in no case prior to the delivery of the products. As a result of the voidance right, the consumer has two weeks' time to test and examine the products at home; within the two-week period, the consumer can void the contract by sending back the products to the seller. The seller bears the shipping cost for the return if the purchase price of the products exceeds an amount of 40 Euros.

For commercial sellers or service providers, it is essential to inform their customers of their voidance right; if the seller or service provider fails to comply with these information duties or if the information is incorrect, then the voidance period does not start to run and, as a result, customers have an indefinite span of time in which they can void the contracts. Also, if the seller informs the customer only after the contract has been concluded, then the voidance period lasts four weeks instead of two weeks. The right to rescind the contract extends to any financing contracts that the consumer concluded simultaneously (online, by mail or by phone) with the sales contract.

The voidance right, which is generally known and quite popular, awards a generally accepted level of protection ' if the seller is located in Germany and is available. If payment has been effected in advance and the seller is not discovered, then these rights may not be enforceable. No duties to post bonds or in other ways deliver security that is imposed on the participants in Internet transactions are in place.

General Terms and Conditions

Under German law, it is a general principle that all contractual conditions must be agreed on for the conclusion of the agreement. This applies to general terms and conditions as well, irrespective of whether the agreement is concluded online or in a bricks-and-mortar shop. General terms and conditions of agreements, therefore, and in particular the price, have to be disclosed to the customer prior to the conclusion of the agreement for them to be incorporated in the contract. To ensure that terms and conditions are incorporated, it is common, but not required, that during the ordering process, online shoppers must visit a special Web site where they can read the terms and conditions, and/or confirm having read and agreed to the terms and conditions by clicking a box on the seller's Web site.

Terms and conditions will not be enforceable if they are unexpected, non-transparent, ambiguous or surprising, which, e.g., may be the case because of their layout or the layout of the Web site. In particular, an offer of allegedly “free services” with a hidden note regarding the subscription with recurring payment obligations somewhere on the Web site can be deemed surprising. Hiding prices also violates competition law and ' subject to German case law ' can be regarded as a criminal offense (fraud).

In individual agreements as well as in terms and conditions, commercial sellers offering their products to individuals as customers are prohibited from deviating from the statutory sales-warranty provisions; specifically, a reduction of the two-year limitation period is prohibited (for used products a reduction to one year is possible).

Other Aspects of Online Commerce

Besides the aforementioned aspects, consumers are protected by several other provisions, e.g., by the Federal Data Protection Act. This Act prohibits transfer of payment details from seller to seller without the prior (written) consent of the customer or without good cause. Making online commerce easier will not justify the transfer of payment details, especially if such payment data transfer is used to disguise further payment obligations on the part of the customer.

Commercial sellers or service providers are obliged to inform customers about some enumerated details; inter alia, seller and service providers have to disclose their identity by publishing an imprint on their Web pages with full address. Furthermore, all ancillary costs such as shipping and taxes have to be indicated. This information, as well as the general terms and conditions, have to be made available to customers in text form, which means that the information must be printable/saveable. It is quite usual that, after conclusion of the contract, commercial sellers or service providers send an e-mail to their customers containing all relevant information, including terms and conditions.

Violation of provisions of general terms and conditions can partly be regarded specifically as violation of competition law. Income of fraudulent online service providers violating competition law can be seized. With regard to e-commerce, sellers or service providers violate competition law if they publish false or misleading information regarding offered products or rendered services, and price, e.g., such as when some ancillary costs are indicated only by an asterisk.

Enforcement

In case a (online) seller violates the regulations of the terms and conditions, or other consumer-protection provisions, consumer-protection organizations are entitled to file an action for injunction.

But even though online shopping in Germany is protected by a range of statutory provisions, effective enforcement, as in other parts of the world, remains a challenge to enforce these rights.