Omnibuses and cancellation buttons – 2022: An eventful year for consumer protection in e-commerce

With the adoption of the Omnibus Directive, the European legislator has not only provided for extensive amendments to the Unfair Commercial Practices Directive, (see here for more on these changes) but also to the Consumer Rights Directive and the Price Indication Directive. The following article provides an overview of the most important innovations resulting from the implementation of those two Directives into German law. It also takes a brief look ahead to the cancellation button as a German particularity that will be provided for under German law in the future.

Amendments to the Consumer Rights Directive and the Price Indication Directive

On 7 January 2020, the European Commission’s so-called “Omnibus Directive” (EU) 2019/2161 entered into force. The Omnibus Directive serves to amend a total of four directives, including the Consumer Rights Directive (“CR Directive” 2011/83/EU), as well as the Price Indication Directive (98/6/EU). Member States had until 28 November 2021 to transpose these into national law. The Federal Republic of Germany has done its homework and submitted corresponding proposals on time.

• The law transposing the amendments to the CR Directive into German law (namely in the BGB and EGBGB) has the unwieldy name “Law amending the Civil Code and the Introductory Law to the Civil Code in implementation of the EU Directive on better enforcement and modernisation of Union consumer protection rules and repealing the Regulation transferring responsibility for the implementation of Regulation (EC) No. 2006/2004 to the BMJV". The law was adopted on 10 August 2021 and published in the Federal Law Gazette of 17 August 2021.
• In addition, the Federal Government has used the implementation of the Omnibus requirements as an opportunity to present a complete “Amendment to the German Price Indication Ordinance”. This new Price Indication Ordinance (PAngV) was adopted by the cabinet on 3 November 2021.
• Also worth mentioning in this context is the “Fair Consumer Contracts Act”. Unlike the aforementioned transpositions, this law is not based on the Omnibus Directive, but is mainly a German particularity. It concerns adjustments to the law on general terms and conditions, for example, with regard to the duration of subscriptions, as well as changes to the OWiG (Regulatory Offences Act), for example, with regard to telephone advertising and the corresponding documentation requirements for the necessary consent. A special “highlight” for the e-commerce sector was included by the German legislator shortly before the adoption of the law by inserting a provision on the termination of consumer contracts in Section 312 k BGB by means of a “cancellation button” requirement (more on this below). This law was passed at the same time as the Act Adapting the CR Directive and was also published on 17 August 2021.

Insofar as these innovations are determined by the Omnibus Directive, that omnibus will release its passengers into the wider world and take effect on 28 May 2022. With regard to the German Fair Consumer Contracts Act, there is a staggered introduction phase between 1 October 2021 and 1 July 2022, which depends on the respective content of the clause.

The following aims to summarise the most important innovations of these three sets of regulations:

The “omnibus price” in the new PAngV

The Omnibus Directive amends the Price Indication Directive with regard to the price reductions so readily used for marketing products.

• According to the new Section 11 PAngV, the lowest total price in the case of price reductions must be indicated to consumers, which was valid for the goods within the last 30 days before the application of the price reduction. This transparency requirement is intended to prevent the use of misleading unrealistic prices in the case of price reductions and applies to both in-store and online trade. This “omnibus price” caused a number of suppliers to fear comprehensive adjustment measures, which in many cases was well-founded.
• This requirement only applies to price comparisons, such as “instead of” prices or the use of crossed-out prices. However, the legislator also clarifies an important exception: digital products, e. digital content and digital services are excluded from the scope of this provision (see also the “Digital Content” Directive (EU) 2019/770).
• The EU Commission has also recently published guidelines on the application of the “omnibus price” on 17 December 2021, available here, which will certainly be helpful for the future application of the adjustments to the Price Indication Directive.

Amendments to the BGB/EGBGB through adaptations of the CR Directive

The Omnibus Directive also makes extensive changes to the CR Directive.

• This applies first of all to the extension of the scope of application of the CR Directive. According to this, the consumer’s information obligations and rights of withdrawal under the Directive will in future apply to contracts for digital products (digital content as well as digital services), which the consumer does not “pay for” with money but with his or her personal data as consideration (see the German implementation in sections 312 (1a), 327 (3) BGB).
• In addition, the adjustments concern the pre-contractual information obligations towards consumers in e-commerce. This includes, for example, information on whether the price has been personalised on the basis of automated decision-making or on the compatibility and interoperability of digital products.
• In addition, there will be special information requirements for so-called “online marketplaces” in the future (Section 312 k from 28 May 2022, then Section 312 l from 1 July 2022, Section 246 d EGBGB). Such online marketplaces enable consumers to conclude distance contracts with other traders or consumers. The pre-contractual information obligations for operators of an online marketplace include, for example, information about the ranking of the goods, services or digital products offered or information about the sellers. For example, the operator of an online marketplace must obtain information from the seller as to whether the seller claims to be an entrepreneur or not, and inform the consumer as a user of the marketplace about this. In detail, there is quite a bit of implementation work for such operators of online marketplaces.
• In addition, the Omnibus Directive entails minor adjustments to the right of withdrawal. In order to effectively exclude the right of withdrawal for contracts subject to payment, it will in future be necessary not only to obtain the consumer’s express consent to the fact that, in the case of digital content, the trader will start performing the contract before the expiry of the withdrawal period and thus the consumer will lose his right of withdrawal. In addition, the respective consent must in future be transmitted to the consumer on a durable medium (e.g. a PDF file). Unless the supplier has effectively excluded the right of withdrawal in the case of digital content, the supplier is not entitled to compensation for lost value if the consumer revokes the contract (Section 357 a (3) of the German Civil Code (BGB)).

The new cancellation button

The Fair Consumer Contracts Act will in future introduce a mandatory 2-step termination process in the new Section 312 k BGB. Wherever the consumer can conclude a subscription contract against payment, the provider should also give the consumer the opportunity to terminate at the same point. According to the legislator’s idea, a cancellation button should be included on such registration pages for memberships at the first stage (with the wording “Cancel contracts here”). This “first” cancellation button should then lead to a confirmation page on the second level, where the respective user is identified and the consumer can effectively send the cancellation (i.e. with the wording “Cancel now”).

• According to the explanatory memorandum, this termination option should apply regardless of whether consumers are logged into their account or not. This is not unproblematic. On the one hand, it may be convenient for consumers to terminate their contract without having to search for their access data. From the provider’s point of view, on the other hand, it must be ensured that no abusive cancellations are made, so that the consumer must in any case provide certain identifying features on the confirmation page. Future practice will show how this actually operates. In addition, it is legally still completely unclear what is meant by “website” in the sense of Section 312 k BGB as amended (apps? Appstores? User interfaces such as on smart TVs?). The legislator’s explanatory notes are little helpful in this regard. They refer to the apparent case law on Section 312 j BGB – which does not exist in this form.
• Furthermore, from the legislator’s explanatory notes, it should make no difference whether the conclusion of the contract is made possible via a website operated by the actual trader or, as in the case of intermediary platforms, via a website operated by a third party. This also places certain technical hurdles in front of the business model of the intermediary platforms. It is conceivable, for example, that such intermediary platforms will have to establish an interface to the consumer’s contractual partner in order to enable the consumer to terminate the contract directly via the platform. Here too, however, the details remain unclear.
  This new termination process to be implemented will pose greater technical challenges for providers and it is expected that the courts will deal with the termination button issues after 1 July 2022.

Outlook

The year 2022 has some far-reaching innovations in store for consumer protection law. The challenges this will place on e-commerce providers should not be underestimated. This is true not only because of the high sanctions – similar to the GDPR – that the European legislator has provided for violations of the provisions of the Omnibus Directive (to impose fines of up to 4% of the company’s annual turnover in the case of a so-called “widespread infringement” or a “widespread infringement with a Union dimension” within the meaning of Regulation (EU) 2017/2394, or up to 2 million Euros in fines should information on turnover not be available).

In addition, the new, purely German requirement for a cancellation button poses immense legal and technical challenges for international providers. Providers should therefore highlight 28 May 2022 and 1 July 2022 in their calendars, if they have not already done so.