In June 2000 the EU Directive 1997/7/EC on the protection of consumers in respect of distance contracts, otherwise known as the Distance Selling Directive was given the force of law in Germany by the Distance Selling Act
Topic: Distance Selling
Who: German legislators
When: June 2000
In June 2000 the EU Directive 1997/7/EC on the protection of consumers in respect of distance contracts, otherwise known as the Distance Selling Directive ("DSD") was given the force of law in Germany by the Distance Selling Act ("DSA"). The DSD was intended to lay down across Europe statutory minimum levels of protection for consumers when buying on-line, by mail-order, by telephone or by any other means not involving face to face contact with the seller. So far so good for harmonised rules across Europe. By setting minimum protection levels, however, the DSD did allow for the possibility of some member states going for higher protection levels, and this is exactly what Germany has chosen to do, whilst other member states such as the UK have opted for the minimalist (but still quite prescriptive) approach.
The areas of divergence between the German DSA and the DSD are in some respects minor and in others far more significant. At the former end of the scale is the requirement that the "entire address" of the seller must be provided before the sale contract is concluded and it must also be stated clearly at what point the conclusion of that sale contract actually takes place. Separately, the disclosure that has to be made on or before the time of delivery must be clearly differentiated (for example by highlighting) from the pre-contract disclosure. As for the right to cancel which is at the heart of the DSD, this must not only be notified clearly to the consumer prior to the sale contract, the seller must also set out clearly the legal consequences of such withdrawal.
Still in relation to the withdrawal right, and perhaps most significantly of all, Germany has chosen to give consumers a longer period after delivery in which to decide whether to withdraw from the contract and seek a refund. The DSD specifies 7 working days after the day of delivery (as does the UK for instance) whilst the DSA goes for 14 days including weekends. In addition, whilst the DSD (and the equivalent UK rules) stipulate that failure to give information about the cancellation rights can lead to an extension of the period during which the consumer can withdraw from the minimum 7 days to up to 3 months, Germany goes for up to 4 months.
On the vexed (and in the UK by no means straightforward) question of who pays the cost of sending back products if the withdrawal right has been exercised, under the German DSA the customer bears the cost of items whose sale price is up to EU40 whilst the supplier pays in respect of more expensive products. Of the other differences, perhaps the most likely generator of litigation and dispute is the introduction of a requirement that if the consumer cancels the contract and the product is returned, the seller is entitled to deduct from the returned purchased monies a quasi-rental in respect of the use that the consumer has had of the products prior to their return. How the level of this rental is to be computed is unclear, and in the absence of further regulations stipulating perhaps a percentage of the total purchase price per day, appears to be a recipe for ongoing disputes well after cancellation.
Why this matters:
Clearly any offer to sell goods and services on an English e-tailer's website is going to be accessible in Germany. It was hoped that the DSD would set English and all other EU e-tailers free from the need to check for compliance with the local rules of all 15 EU member states before selling on-line in Europe. Now, unless the site clearly states that German residents may not order products from the site, the e-tailer faces a risk of German regulatory action unless it harmonises up the disclosure and the deal it provides to its consumers to the level now set by Germany.
Does any other EU legislation in the pipeline offer a solution to this? Unfortunately not. It might have been thought that the E-Commerce Directive, due to have the force of law across Europe by February 2002, would be coming to the rescue with its "country of origin" principle, dictating on the face of it that European marketers and sellers can rest easy so long as they comply with their local laws and regulations. Unfortunately however, this is not the case here. Why? Because sellers will still have to comply with the laws of the country of destination (or "access" in web terms) if those laws relate to "consumer contracts." This is exactly what the DSD does relate to.
This is not the first time in marketinglaw.co.uk that we have sardonically cried "Three cheers for the single market".