New European Consumer Legislation

Pursuant to the EU Consumer Rights Directive of 25 October 2011 (the “Directive”), all EU Member States were obliged to ensure the implementation and uniform application of the consumer rights provisions of the Directive by 13 June 2014. The lower house of German parliament (Bundestag) had already implemented parts of the Directive (including the so-called "button solution" in the case of online purchases) into German law in March 2012. The harmonisation process in Germany was fully completed with the entry into force of the German ‘Act Implementing the Consumer Rights Directive and Amending the Housing Act’ (Gesetz zur Umsetzung der Verbraucherrechterichtlinie und zur Änderung des Gesetzes zur Regelung der Wohnungsvermittlung) of 20 September 2013, which entered into force on 13 June 2014.

Besides introducing amendments with regard to various obligations to provide information and advise consumers of their rights, the new consumer legislation now no longer solely relates to distance selling agreements and door-to-door selling transactions (which are now being referred to as ‘off-premises contracts’), but also to retail trade conducted in conventional shops. Although it remains the case that consumers in the latter context do not have a right of withdrawal, the provisions relating to transportation and ancillary costs, including the corresponding obligations to advise consumers thereof, will in future also apply to retail sales. Accordingly, not only online traders and persons using other distance selling channels should examine whether their business practices satisfy the requirements imposed by the new legislation, but also conventional retailers.

The following now applies to all agreements concluded with consumers:

• Consumers will only have to pay shipping or ancillary costs if they have been advised of the amount of such costs or of the possibility that such costs may be incurred, prior to entering into a contractual relationship.

• The possibility of charging consumers for the use of certain means of payment or for calling a hotline provided by the trader has been significantly curtailed.

• Consumers will only be obliged to pay for services that go beyond the main services provided, if this has been expressly agreed upon. The mere confirmation of certain pre-set details will not be sufficient in this regard; an agreement within the meaning of the new legislation will only come into effect if the consumer adds the ‘tick’ to the relevant box him or herself.

• Consumers must be informed, prior to the conclusion of any agreement, of (a) the characteristics of the product (in the case of digital products, this includes information on their functionality and any restrictions on their compatibility with other content/hardware/software), (b) the identity of the trader, (c) the total price for the products / service(s) offered by the trader, and (d) his / her rights arising out of warranties and any guarantees and, where applicable, the term of the agreement and any conditions for the termination of the agreement.

The following additionally applies in respect of off-premises contracts:

• New model instructions on withdrawal: The statutory model instructions relating to the exercise of the right of withdrawal have been modified. Consequently, an instruction provided in accordance with the old legislation will be invalid, and the two-week withdrawal period will not commence running. This also applies to other rights of withdrawal arising, for example, out of consumer loan agreements and consumer leasing agreements.

• Model withdrawal form: In order to exercise his / her right of withdrawal, a consumer will have to make use of the model withdrawal form provided. He / she can no longer exercise his / her right of withdrawal by simply returning the goods in question, as was previously the case.

The new law also contains a number of provisions which remove ambiguities present in the old law:

• The scope of application of the consumer protection provisions will in future apply only to sales and services provided in return for payment of a consideration.

• Consumers no longer have an ‘indefinite’ right of withdrawal, even in cases where they were not properly informed of their statutory rights of withdrawal. In such cases, the right of withdrawal will now expire at the latest 12 months after the notional expiration date for the withdrawal period that would have applied, had the consumer been properly advised of his / her rights.

• It is now unambiguous that goods / monies received are to be returned within 14 days of the exercise of any right of withdrawal, and that a trader will have a right of retention if a consumer only exercises his / her right of withdrawal, but does not return the goods to the trader.

All of this having been said, European consumers can continue to buy a loaf of bread without having to be instructed on their rights of withdrawal, given that such day-to-day transactions remain unaffected by the legislative amendments.