Inadequate implementation may lead to injunctive proceedings

On February 1, 2017, new information obligations pursuant to the German Consumer Dispute Resolution Act (Verbraucherstreitbeilegungsgesetz) will come into effect. Under the new law, consumers must be informed of the possibility of bringing an action to a consumer arbitration entity (Verbraucherschlichtungsstelle) in case of a dispute.

General information and notification obligations Since the European ODR Regulation became applicable last year, online traders have already been obligated to provide a link to the European online dispute resolution platform (ODR platform) on their websites. As of February 1, 2017, all companies which are using general terms and conditions (Allgemeine Geschäftsbedingungen) or maintaining a website must inform consumers of whether they are willing or legally obligated to participate in dispute resolution proceedings before a consumer arbitration entity.

The information must be easily accessible to the consumer, as well as being clear and comprehensible and must appear on the company's website or be provided together with the general terms and conditions. If both a website and general terms and conditions are used, the information must be included in both. The information obligation applies irrespective of whether the companies actually participate in the dispute resolution proceedings or are legally required to do so. Even if a company is neither willing nor obligated to participate, it must - due to a "negative information obligation” - inform the consumers accordingly. However, companies which did not employ more than ten persons on December 31 of the previous year are excluded from the information obligation. Should the company be willing or required to participate, it must also refer the consumer to the relevant consumer arbitration entity as well as provide information on the entity’s address and website.

Additional notification obligations in case of a dispute

If a dispute with a consumer concerning an agreement between the consumer and the company arises, the company must also inform the consumer in text form of the consumer arbitration entity that the consumer may contact, should the dispute not be resolved. This obligation applies to all companies including those which do not maintain a website or use general terms and conditions, as well as those which do not employ more than ten persons. In addition, the company must, once again, provide information on whether it is willing or legally required to participate in the dispute resolution proceedings before this entity.

List of recognized consumer arbitration entities The consumer arbitration entities relating to the above-mentioned obligations are to be distinguished from the online dispute resolution platform which the EU Commission operates on the basis of the European ODR Regulation. The consumer arbitration entities which the above-mentioned obligations refer to are rather those which have been recognized or established either by the Federal Office of Justice (Bundesamt für Justiz, BfJ) or pursuant to statutory regulations on the implementation of consumer arbitration proceedings. The BfJ provides a list of recognized consumer arbitration entities on its website.

Risk of injunctive proceedings

Companies that have not duly implemented the new obligations by February 1 2017 may be at risk of becoming subject to injunctive proceedings initiated by consumer organizations or other third parties. Consequently, there is an immediate need for action for all companies which have not yet adjusted their general terms and conditions or websites to the new information requirements under the German Consumer Dispute Resolution Act.