The Federation of German Consumer Organisations, as plaintiff, has taken legal action against the company 'Payback', which operates a customer loyalty and discount system.
The plaintiff primarily seeks an injunction against the defendant (Payback) to cease using three clauses contained within its general terms and conditions (GTCs), which consumers can use to register for the discount program. The appellate court did not object to the use of these clauses.
The plaintiff's appeal, which was admitted by the appellate court, was partially successful. In its judgment announced on July 16, 2008, the VIII Civil Senate of the Federal Court of Justice (BGH), which is responsible, among other things, for sales law, declared a clause used by the defendant concerning consent to the storage and use of data for sending advertising by post, email, and SMS to be invalid insofar as it relates to email and SMS (Section 307 (1) sentence 1, (2) no. 1 German Civil Code - BGB). However, the Federal Court of Justice did not object to a clause stating that the date of birth is required for participation in the 'Payback' program, nor to a form provision concerning the reporting of discount data for the administration and payment of discounts, as these do not contain regulations deviating from legal provisions (Section 307 (3) sentence 1 BGB).
The consent clause, titled 'Consent to Advertising and Market Research', reads as follows:
“By my signature, I agree that the data provided by me above, as well as the discount data (goods/services, price, discount amount, location, and date of transaction), may be stored and used exclusively by L. Partner GmbH and its partner companies, in accordance with number 2 of the enclosed data protection notices, for advertising directed to me (e.g., information about special offers, discount promotions) by post and, if applicable, via services requested by me (SMS or email newsletter), as well as for market research purposes. …
❏ Check here if consent is not given. …”
The clause used thus distinguishes between advertising by post, email, and SMS.
With regard to consent to the storage and use of data for sending advertising by post, the provision had to be measured against Sections 4 (1) and 4a (1) of the Federal Data Protection Act (BDSG), which establish specific requirements for the permissibility of data collection, processing, and use. The Federal Court of Justice ruled that the consent clause is not objectionable from this perspective. In particular, Section 4a BDSG does not imply that consent is only effective if it is 'actively' declared by the consumer signing a separate consent form or checking a box provided for giving consent ('opt-in' declaration). Rather, Section 4a (1) sentence 4 BDSG* indicates that consent can also be given in writing together with other declarations, provided it is specifically highlighted – as is the case here.
In contrast, the consent clause used here is invalid insofar as it relates to consent for the data usage sought by the defendant for advertising via email or SMS. In this respect, the Act Against Unfair Competition (UWG) also applies. According to Section 7 (2) No. 3 UWG**, advertising using electronic mail (email and SMS), among other things, constitutes an unreasonable nuisance unless the recipient's consent has been obtained. The VIII Civil Senate of the Federal Court of Justice – in coordination with the I Civil Senate of the Federal Court of Justice, which is responsible for legal disputes concerning claims under the Act Against Unfair Competition – ruled that consent clauses designed such that the customer must take action and check a box if they do not wish to give their consent to receive advertising via electronic mail ('opt-out' declaration) are incompatible with this provision. Section 7 (2) No. 3 UWG requires that consent be given through a separate declaration ('opt-in' declaration). The requirement for a separate declaration stems from the EC Data Protection Directive for Electronic Communications (2002/58/EC), which the German legislator intended to implement with the regulation in Section 7 UWG. According to this Directive, consent can be given in any appropriate manner that expresses the user's wish in a 'specific indication'. This wording clarifies that a separate declaration of consent from the data subject, specifically related only to receiving advertising via electronic mail, is required. Such a declaration cannot be inferred solely from the signature with which the customer accepts the contractual offer aimed at granting discounts.
The registration form used by the defendant does not provide for a separate declaration of consent. While the consumer can provide their email address or mobile number in the form, according to the form's design, they only consent to electronic information about 'extra point opportunities, top promotions, and news about Payback...', but not to the sending of any kind of advertising via electronic mail.
The second clause, challenged by the plaintiff but without success, stipulates:
“If you participate in the Payback program, … your date of birth … will be required. …”
The Federal Court of Justice ruled that this provision is not subject to content review under Section 307 (3) sentence 1 BGB. The provision of the date of birth serves the purpose of the defendant's contract with the consumer (Section 28 (1) sentence 1 no. 1 alternative 1 BDSG).*** Given the large number of participants in the Payback program, a practical and simultaneously secure method for identifying program participants is among the contractual purposes. The provision of the full date of birth is particularly suitable for preventing identity confusion in a bonus program that, according to the appellate court's findings, has approximately thirty million participants.
The third clause, which was the subject of the appeal proceedings, reads:
“If you use your Payback card at a partner company, this company will report the discount data (goods/services …) to L. Partner for crediting, settlement with partner companies, administration, and payment of discounts.”
The Federal Court of Justice confirmed the appellate court's view that this form provision is also not subject to content review (Section 307 (3) sentence 1 BGB). The reporting of discount data by the partner company, even concerning the goods and services acquired by participants using the Payback card, also serves the purpose of the contractual relationship between the defendant and the participants of the discount system (Section 28 (1) sentence 1 no. 1 alternative 1 BDSG). The partner companies affiliated with the bonus program can utilize a variety of different discounting options, which may specifically depend on the respective goods or services. Given this, the defendant requires knowledge of the goods acquired or services utilized by the customer at the partner company to provide the customer with complete, accurate, understandable, and verifiable information about their point balance.
Notes:
* Section 4a (1) sentence 4 BDSG states: “If consent is to be given in writing together with other declarations, it must be particularly highlighted.”
** Section 7 (2) No. 3 UWG stipulates: “An unreasonable nuisance is particularly presumed in the case of advertising using automatic calling machines, fax machines, or electronic mail, without the consent of the recipients.”
*** Section 28 (1) sentence 1 no. 1 of the BDSG stipulates: “The collection, storage, modification, or transmission of personal data or its use as a means for the fulfillment of own
Judgments:
Federal Court of Justice (BGH) – Judgment of July 16, 2008 – VIII ZR 348/06; Munich I Regional Court – Judgment of March 9, 2006 – 12 O 12679/05; Munich Higher Regional Court – Judgment of September 28, 2006 – 29 U 2769/06
Source: Press Release No. 135/2008 from the Press Office of the BGH dated July 16, 2008, Herrenstr. 45 a, 76133 Karlsruhe, Tel. 0721-159-5013, Fax. 0721-159-5501, E-Mail pressestelle@bgh.bund.de.
Goldberg Rechtsanwälte
Attorney Michael Ullrich, LL.M. (Information Law)
E-mail: m.ullrich@goldberg.de
