January 20, 2022
New Consumer Subscription Contract Rules Introduced in Germany
The Fair Consumers Contract Act was issued in Germany in August 2021 and became effective in October 2021.
The new payments regulations will impact subscription-based business models in particular, including gaming, streaming and other providers of digital content. Those impacted have a transition period available, with the required changes coming into force over different dates in 2022.
Here’s what the regulations mean:
Consumer contracts can no longer bind customers for a year upon renewal. Subscription merchants need to provide an easily accessible cancellation button so consumers can cancel their subscriptions when they wish.
From 1st March 2022, the new regulation affects the ability to automatically extend subscriptions for another year, once an initial 2-year period, allowed in the law, no longer applies. Subscription contracts with consumers can still be binding for a period of up to 2 years, but thereafter it is now mandated that customers are given the right to cancel their subscription at any time using the aforementioned cancellation button and subsequent confirmation button.
From 1 July 2022, impacted merchants will need to implement the cancellation button. This button is mandatory and must be within easy reach of the consumer. The rules regarding the cancellation button and what must be provided to the consumer once they hit the button are lengthy and should be consulted.
The regulations apply to all customer subscription contracts concluded from 1st March 2022 and apply to all contracts entered into after 1st October 2022.
If impacted, we recommend merchants consult your legal advisors and/ or payment service provider for all the relevant details.
The MRC will provide a round table discussion on the topic in the coming month (Jan/Feb 2022), to facilitate open questions and to discuss the real impacts on consumers and subscription retailers. Details will be available on our Events Calendar.
See details of the Act on the German Federal Ministry of Justice website here: BMJ | Current legislative procedures | Fair Consumer Contracts Act