German Terms of Service mandatory when targeting German consumers


January 19, 2015 Leave a comment
German consumer protection law puts a set of quite specific restrictions on the enforceability of clauses in B2C standard contracts, such as Terms of Service for an online game or platform. Furthermore, it is an overarching principle of these statutory consumer protection rules that Terms of Service in consumer contracts must be clear, unambiguous, and easy to understand for the customer. In addition, the German Telemedia Act requires any business providing online services to disclose a statutory set of contact information. Failure to comply with these rules may result in enforcement action from public authorities – but much more frequently, in cease and desist letters and lawsuits brought by competitors or consumer associations.

Court: German Language Mandatory

A default judgment from the Regional Court of Berlin (Docket no. 15 O 44/13) against messaging provider WhatsApp Inc. has confirmed again that this principle also requires service providers to speak their customers’ language. A service targeting the German market therefore needs German language Terms of Service.

The court ordered WhatsApp to provide German language Terms of Service and also a full set of statutory corporate and contact information. In the case at hand, WhatsApp had been sued by a consumer watchdog group known for its recent zealous focus on the Terms and business practices of online and gaming companies. Similar lawsuits could however also be brought by competitors, as breaches of consumer protection law are also considered acts of unfair competition. If WhatsApp fails to comply with the judgment, i.e. fails to provide German language terms for users within Germany, it is in contempt of court, which would allow the court to fix penalties of up to EUR 250,000 and even have WhatsApp’s CEO arrested for up to 6 months (although the latter seems more of a theoretical possibility).

The decision is not entirely surprising, as most legal scholars have argued for a long time that transparency of terms also means they need to be in a language the consumer understands. It is unknown whether WhatsApp has appealed the default judgment. Regardless thereof, it should be seen as a useful reminder that companies entering the German market would be well advised not sweat the review of their terms.

What this means for you

When in Berlin, do as the Germans do. If you are entering the German market, you need German language Terms of Service. In most cases, a simple translation of existing Terms will however not suffice. Nothing is gained if the Terms are in German, but violate statutory consumer protection rules – they would be unenforceable and the further legal consequences would be the same: Competitors, consumer organizations and authorities could take legal action.

For US companies in particular, it is important to note that standard liability and warranty disclaimers, privacy language, mandatory arbitration clauses and the choice of governing law are most often unenforceable and incompliant with consumer protection law in Germany and other European jurisdictions. The first step for any foreign company wishing to extend its field of activity into Germany should be a translation and thorough review of its Terms of Service.

Websites also need an easily identifiable “Contact” section stating the full legal name of the responsible entity and various contact information for itself and its directors, as applicable. Additional requirements arise where a site offers journalistic content. It is best practice to link to such page from any point of the website through a permanently visible navigation pane accessible without scrolling.

Checklist

  • Obtain German translation of Terms of Service
  • Have Terms of Service reviewed for compliance with German law
  • Disclose the following information in a dedicated “Contact” section: Full legal name of entity, full names of all directors, address of registered seat, e-mail address, phone number, and, as applicable, company register number, supervisory authority, supervising professional body (where applicable – such as a state bar or law society), and VAT ID number.
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Felix Hilgert

Felix Hilgert

Senior Associate at Osborne Clarke
Felix is a lawyer with Osborne Clarke's IT Team in Cologne, where he acts for companies of all sizes, from start-ups to market leaders.

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