The Federal Cabinet has approved the draft of a Law to Combat Unauthorised Telephone Advertising and So-Called Internet Cost Traps .
“We effectively protect consumers from unwanted advertising calls and internet cost traps, without burdening businesses with impractical regulations. After all, consumers are increasingly ordering goods and services by phone or via the internet. This should, of course, continue to be possible without problems,” said Federal Minister of Justice Brigitte Zypries. “In the future, consumers will be able to more easily withdraw from contracts concluded over the phone, and we will better protect them from fraudulently imposed contracts. Unscrupulous companies that disregard the existing ban on unauthorized telephone advertising must expect to face significant fines. Furthermore, to better apprehend the black sheep of the industry, caller ID must no longer be suppressed during advertising calls. Violations will also incur fines,” Zypries continued.
Unwanted telephone advertising has developed into a major problem: According to a survey by the forsa institute from autumn 2007, 86 percent of the population feel harassed by unfair advertising calls, and 64 percent of respondents were called by a company without their consent in recent months.
Telephone advertising to consumers without their consent is already expressly prohibited under current law. It constitutes an unreasonable nuisance under the Act Against Unfair Competition (Section 7 para. 2 No. 2 UWG). Anyone who violates this prohibition can be sued for injunctive relief by, among others, competitors or organizations such as consumer protection associations. Furthermore, there is a claim for damages if the caller acted negligently or intentionally. In cases of intentional action, the UWG provides for a claim for disgorgement of profits. However, unscrupulous companies repeatedly disregard this prohibition to the detriment of consumers, and the enforcement of existing law encounters practical difficulties.
Specifically, the draft law provides for the following improvements for consumers:
- Violations of the existing prohibition of unauthorized telephone advertising to consumers can in the future be punished with a fine of up to 50,000 Euros. Furthermore, the law clarifies that an advertising call is only permissible if the called party has explicitly declared beforehand that they wish to receive advertising calls. This prevents callers from relying on declarations of consent that the consumer has given in a completely different context or retrospectively.
- During advertising calls, the caller may no longer suppress their phone number to conceal their identity. Many unwanted advertising calls go unpursued because it is not possible to ascertain who made the call. This is because companies typically make use of the option to suppress their caller ID. A corresponding prohibition is to be included in the Telecommunications Act (TKG). Violations of the prohibition on caller ID suppression are subject to a fine of up to 10,000 Euros.
- Consumers will have more opportunities to revoke contracts concluded over the phone. Contracts for the delivery of newspapers, magazines, and illustrated periodicals, as well as for betting and lottery services, can in the future be revoked, just as is already possible today for all other contracts that consumers have concluded over the phone. Unauthorized telephone advertising is particularly often used here to induce consumers to conclude a contract. Until now, there has been no right of revocation for these (§ 312d para. 4 No. 3 and 4 BGB). These exceptions are to be eliminated. For the right of revocation, it will not matter whether the advertising call was unauthorized. The provision allows for revocation, regardless of the reasons.
- If the consumer has revoked the contract within the stipulated period, they are not required to fulfill it. The revocation period is – depending on the circumstances of the individual case – two weeks or one month and does not begin before the consumer has received instruction on their right of revocation in text form (e.g., via email or fax).
- Protection against fraudulently imposed contracts, including so-called internet cost traps, will be improved:
- If consumers have not been informed of their right of withdrawal in text form, they will be able to revoke contracts for services concluded by phone or online in the future. Previously, in such cases, there was no right of withdrawal if the entrepreneur had commenced the performance of the service with the consumer's express consent or if the consumer had initiated the performance themselves. Unscrupulous entrepreneurs have deliberately exploited this regulation to foist contracts on consumers over the phone or online. The law now removes the basis for such conduct. If a consumer withdraws from such a contract, they are only obliged to pay for the services rendered by the entrepreneur up to that point if they were informed of this obligation before concluding the contract and nevertheless agreed to the service being performed before the end of the withdrawal period. This makes the practice of foisting contracts economically unattractive, as companies perform at their own risk.
Examples:
- An unscrupulous company offers the creation of a personalized horoscope online. Only the fine print reveals that a fee is required; the website's design gives the opposite impression. No instruction on the right of withdrawal is provided. Therefore, the consumer enters their personal data (name, address, date of birth, etc.) without hesitation. A week later, they receive an invoice for 100 Euros. Only then do they realize they have entered into a contract subject to a fee. In the future, the consumer can still withdraw their contractual declaration as long as they have not paid in full. If the company did not inform them before they made their declaration that they would have to pay compensation for the value of the services rendered up to that point in the event of withdrawal, the company cannot demand anything from them.
or
- A consumer is called by their telecom provider and persuaded to agree to a supposedly cheaper tariff with a one-year term. Neither during the call nor later does the telecom provider inform the consumer of their right of withdrawal or of the obligation to pay compensation for services rendered up to that point in the event of withdrawal. The consumer continues to use their phone as usual but only realizes from the next three monthly bills that the supposedly cheaper tariff is actually more expensive. Under the new regulation, the consumer can then still withdraw their contractual declaration.
- Furthermore, the termination of a long-term contractual relationship or the power of attorney for it, in the event of a provider change, will in the future require text form if the new provider acts vis-à-vis the consumer's previous contractual partner. This prevents a new provider from terminating the consumer's contract with their previous provider without a corresponding instruction from the consumer. This has frequently occurred with unscrupulous providers of telecommunication services.Example: A telecom provider persuades a consumer by phone to switch providers (“You save a lot of money and don't have to worry about anything”). Previously, the calling company could easily handle the processing with the previous provider. In the future, the termination of the contractual relationship between the consumer and their previous telecom provider will require text form (e.g., email, fax). The new provider can therefore only influence the existing contractual relationship if it can present such a “document” from the consumer. The consumer, who was not informed of their right of withdrawal, can also still withdraw from the new contract in the future, even if they have already made calls via the new provider (see above).
The draft law approved by the Federal Cabinet today will now be forwarded to the legislature. The opinion of the Federal Council can be expected by mid-September 2008. Thereafter, the draft law will be deliberated by the Bundestag. The entry into force of the law is expected in early 2009. The law does not require the approval of the Federal Council.
Further information on the topic is available on the website of the Federal Ministry of Justice at www.bmj.bund.de/cold-calling.
Source: Press release from the Press and Public Relations Department of the
Federal Ministry of Justice, July 30, 2008, Responsible: Eva Schmierer; Editors: Dr. Henning Plöger, Dr. Isabel Jahn, Johannes Ferguson, Ulrich Staudigl, Mohrenstr. 37, 10117 Berlin, Phone 01888 580-9030, Fax 01888 580-9046, presse@bmj.bund.de
Goldberg Rechtsanwälte
Attorney-at-Law Michael Ullrich, LL.M. (Information Law)
E-Mail: m.ullrich@goldberg .de
