Heine, a German mail-order company, had standard terms and conditions of sale that the consumer would pay a standard flatrate of EUR4.95 for delivery costs and that this would not be refunded by the supplier if the customer withdrew from the contract.

A German consumer association sought an injunction to restrain Heine from charging delivery costs after a withdrawal. The injunction was granted at first instance and the Higher Regional Court in Karlsruhe dismissed Heine's appeal. Heine appealed to the German Federal Court of Justice (GFCJ).

The GFCJ held that German law did not grant the buyer any right to reimbursement of delivery costs, but held that if the Distance Selling Directive (DSD) precluded the charging of delivery costs after a withdrawal, the German Civil Code would have to be so construed such that the supplier must reimburse the delivery costs to the consumer. The GFCJ stayed proceedings and sought a preliminary ruling from the European Court of Justice (ECJ) on whether Articles 6(1) and (2) of the DSD precluded such national legislation.

The ECJ held that Articles 6(1) and (2) must be interpreted as precluding national legislation that allows the supplier under a distance contract to charge the costs of delivering the goods to the consumer where the latter exercises his right of withdrawal. The DSD thus obliges online retailers to refund the original cost of delivery to consumers who withdraw from the contract The only permissible cost that retailers can pass on to consumers is the cost of returning the goods.

This decision should not affect most UK-based online retailers: it is in line with the Office of Fair Trading’s (OFT) interpretation of this aspect of the DSD. The OFT has expressed the view that "the normal postage and packing charges for the delivery, but not the return, of distance sales purchases, must always be refunded in addition to the cost of the goods when orders are cancelled during the cooling off period". The ECJ's endorsement of that position will be welcomed by consumers, who can now expect a refund of their delivery changes whether dealing with UK or non-UK online retailers within the European Union. At the same time, UK retailers will be assured that they have not been refunding charges on an unjustified whim of the OFT.