Order and cancellation buttons: Important decisions for legal practice

Two recent rulings by Germany’s Federal Court of Justice (Bundesgerichtshof) and Dusseldorf Higher Regional Court (Oberlandesgericht Düsseldorf) provide a bit more clarity in legal practice on the requirements for correctly designing website order buttons and cancellation buttons and on the legal consequences of non-compliance with these requirements.

I. Federal Court of Justice, judgment of 4 June 2024 - X ZR 81/23 on order buttons

The Federal Court of Justice recently specified the requirements for the design of order buttons (section 312j(3) of the German Civil Code) as well as the legal consequences under unjust enrichment law if the contract is invalid due to a breach of said section in accordance with section 312j(4) of the German Civil Code.

An order button obliges traders to design the ordering situation in electronic commerce in such a way that the consumer is expressly made aware of the fact that they are committing to a payment when placing their order. If the order is placed via a button – the order button – this must be clearly labelled with nothing other than the words “Order with obligation to pay” (“zahlungspflichtig bestellen”) or with a correspondingly clear phrase in accordance with the statutory provisions.

The defendant, which operates an online booking platform, offered within the booking process for air travel the option of a “free 30-day trial subscription” for Prime membership, which generally includes discounts on travel products. The offer expressly stated that the (trial) subscription could be cancelled “at any time” and would otherwise be “automatically upgraded to a paid subscription after 30 days”. By clicking the text field, customers were then able to book the selected flight at a discounted rate. Finally, the discounted price for the flight and the “Buy now” button appeared. The claimant booked a flight on the defendant’s website and selected the discounted fare. As the claimant did not cancel the free trial subscription on time, the defendant later charged the claimant the subscription price, which the claimant demanded back in her lawsuit.

Both the previous court instance and the Federal Court of Justice held the specific design of the website to be in breach of section 312j(3) of the German Civil Code. Firstly, the Federal Court of Justice clarified that that section also applied to an initially free trial subscription, provided that it is immediately followed by a paid subscription. This is because, in this case, the consumer already undertakes to make a payment when the contract is entered into, despite the option of cancellation at any time.

It was not sufficiently clear from the specific design of the defendant’s order page that the wording “Buy now” (“Jetzt kaufen”) referred not only to the flight but also to the subscription contract, the Court said. Yet it ought to be clear on the input screen which of the trader’s services the customer was undertaking to pay for by pressing the button. It should therefore also be made clear by means of a clear reference if, in a standardised order process, clicking the ”Buy now” button once results in two or more different contracts being entered into. This was not the case in this instance, according to the Court.

Accordingly, the Federal Court of Justice also awarded the claimant a claim for restitution against the defendant in the amount of the subscription price. The Federal Court of Justice also ruled that the claimant’s price advantage for the discounted flight should not be offset against this restitution claim. This is because the protective purpose of section 312j(4) of the German Civil Code precludes a claim by the defendant for compensation under section 818(2) of the German Civil Code. Section 312j(3) of the German Civil Code serves the purpose of protecting the consumer from being misled and being rushed due to unclear or confusing ordering situations and therefore has the protective effect similar to a legal rule, the Court said. This protective purpose would be undermined if the trader could still enforce the payment, to which it had not made the necessary reference before the contract was entered into, by circumventing it with a claim for compensation for lost value if the consumer was unable to return the service.

II. Dusseldorf Higher Regional Court, judgment of 23 May 2024 - 20 UKl 3/23 on cancellation buttons

Since 1 July 2022, companies that give consumers the option of entering into contracts with continuing obligations via a website must given the option of cancelling such contracts as easily as possible online via a cancellation button, section 312k(1) of the German Civil Code. It does not matter whether the contract with the consumer was actually entered into online, or whether the contract was entered into before 1 July 2022. This means that old contracts are also covered if the company now offers the option of entering into contracts on its website. A breach of the provisions of section 312k(2) of the German Civil Code not only harbours the risk of warnings or lawsuits, but also gives consumers the right to terminate the contract at any time and without notice in accordance with section 312k(6) of the German Civil Code.

Section 312(2) of the German Civil Code stipulates a two-stage process for the cancellation button. The first stage requires a cancellation button which clearly states that clicking the button will redirect the consumer to a page that allows them to cancel their contracts (confirmation page). Dusseldorf Higher Regional Court clarified that the words “Cancel contracts” (“Verträge kündigen”) used by the defendant fulfilled these requirements.

After clicking the cancellation button, the consumer should then be redirected to a confirmation page in a second step, where they can provide the information specified in section 312(2), sentence 3 no. 1. These details are both minimum and maximum requirements, which means that the trader may not request less or more information from the consumer. Furthermore, the confirmation page must also contain a confirmation button in accordance with section 312(2), sentence 3, no. 2 of the German Civil Code, which clearly states that the consumer is submitting a declaration of cancellation by clicking the button. The law also stipulates that the buttons and confirmation page must be ”easily accessible”.

In the case ruled on by Dusseldorf Higher Regional Court, after clicking the “Cancel contracts” (“Verträge kündigen”) button on the defendant’s website, consumers were first redirected to a page where they first had to confirm their identify before being redirected to the confirmation page. Registered customers were able to log in with their user name and password. Non-registered customers first had to enter their contract account number and the postcode of their consumption location in order to confirm their identity. Identification, whether by user name or contract account number, was only completed when the “Register” (“Anmelden”) button was confirmed.

Dusseldorf Higher Regional Court held that this design constituted an unauthorised ”splitting” of the second stage (confirmation page) as it represented a complication that deviated from the law or a further stage not provided for by law, the Court said.

All information to be provided by the consumer as well as the confirmation button “Cancel now” (“Jetzt kündigen”) must be located on just one confirmation page, the Court said. This could be deduced from the wording “directly and easily accessible” (sentence 4 of section 2). On the other hand, the need to scroll down the confirmation page was basically acceptable, it said.

The judgment of Dusseldorf Higher Regional Court emphasises the strict interpretation of the requirements in accordance with section 312k of the German Civil Code. The judgment is not yet finally binding. The Court has allowed an appeal, as there still has not been a supreme court decision on section 312k of the German Civil Code.

III. Conclusion

The two rulings clearly show how challenging the implementation of consumer protection regulations can be in practice and the considerable risks this entails for companies. Although the judgments do not come as a huge surprise, they clarify the legal guidelines for consumer protection and once again make it clear that the regulations must be observed when designing websites. Companies should therefore closely follow the legal requirements and, particularly with regard to the cancellation button, keep a close eye on further case law.