E-Commerce: Extended information duties on alternative resolution for consumer disputes

Since February 1, 2017, traders in sales or service contracts with consumers have to comply with new information duties on their websites and in their general terms and conditions. These requirements arise from the German Consumer Dispute Resolution Act, which entered into force in April 2016, and complement information duties already existing in the European Union. 1) What information duties have existed so far?

The European ODR Regulation (Regulation (EC) 524/2013) already entered into force in January 2016. The main objective of the Regulation was to establish an online dispute resolution platform at EU level, in order to resolve disputes between consumers and traders quickly and effectively.

Traders are required to provide an easily accessible link to the European online dispute resolution platform (ODR platform).

2) What new information duties exist since February 1, 2017?

As of February 1, 2017, there are new additional information duties, which arise from the German Consumer Dispute Resolution Act that entered into force last year.
Traders must now also communicate to consumers whether they are willing or obligated to participate in dispute resolution proceedings before a consumer arbitration entity. This information duty applies to all businesses employing more than ten persons and maintaining a website or using general terms and conditions.

If the business is obligated to participate in a dispute resolution procedure or is obligated to do so by virtue of statutory provisions, it must also refer to the competent consumer arbitration entity.

Apart from a few exceptions, such as in the energy or aviation sectors, businesses are basically free to participate in a relevant dispute resolution procedure. Participation offers advantages for businesses, though. Above all, in the case of small disputes, dispute resolution procedures represent a cost-effective alternative that avoids long waiting times for court hearings to take place in court proceedings. In addition, the results of a conciliation procedure are not made public, which avoids negative publicity and the rise of precedents.

3) How to comply?

Companies must present the information on their website and in their general terms and conditions in an easily accessible manner, clearly, and comprehensibly. Businesses maintaining a website must provide the information on the website as well as in their general terms and conditions according to the statutory provisions, which are not completely clear in this regard, however. We advise to display the information on the website in the imprint section or in the footer of the website.

4) Conclusion

The EU ODR platform and the German Consumer Dispute Resolution Act offer companies an interesting alternative to settle consumer disputes. The information duties, however, require a accurate  implementation on the website and in the general terms and conditions. In case of non-compliance companies may be at risk of becoming subject to injunctive proceedings initiated by consumer protection organizations.