What happened? What’s going to happen? 2017 produced several highly relevant judgements, which directly affect online print providers. Martin Schirmbacher explains why these judgements are of critical importance in 2018.
As at the start of every new year, legal advisor to the Initiative Online Print, Dr. Martin Schirmbacher, an attorney specializing in IT law and partner at HÄRTING Rechtsanwälte, does an in-depth review of the year just ended and provides an outlook about what online print providers can expect in terms of legal issues in the new year. This time I met with Martin Schirmbacher in Berlin and we talked about several of these relevant legal rulings. What emerged is an informative interview, which I naturally don’t wish to deprive interested readers of.
Bernd Zipper: Last year there were once again a whole raft of judgements, it’s difficult to keep track. Which of them are from your perspective the most important for the online print industry?
Martin Schirmbacher: Of particular importance to online print providers and other online store operators was what at first glance looked like an unremarkable judgement issued by the Higher Regional Court in Stuttgart in September. A building contractor had agreed a contract with a house owner on the latter’s doorstep to install an elevator on the outer façade of the house. Part of the project involved made-to-measure work. Because the owner was not satisfied with the workmanship, he revoked the contract and sued the contractor for repayment of his deposit. The defendant building contractor however invoked § 312g Par. 2 No. 1 S. 1 BGB (German Civil Code). This standard specifies that there is no right of withdrawal from contracts for the supply of goods, which are not prefabricated and the production of which is dependent on an individual choice or specification being made by the consumer or which are clearly tailored to the personal needs of the consumer.
Bernd Zipper: Yes – and what does that have to do with online print? How relevant is this issue?
Martin Schirmbacher: More than you think. The legal exception I have just quoted is in fact the reason why there is no right of withdrawal from contracts involving customized products. Prior to the HRC issuing its judgement, both the court of first instance and the Munich District Court in another ruling, assumed that the exemption required the contractor to have already started manufacturing the goods. Several law professors also hold this view. That would mean that where somebody orders a photobook or private business cards, they have a right of withdrawal provided the online print provider has not yet commenced production. Describing such a situation as a catastrophe is putting it mildly to say the least.
Bernd Zipper: This would indeed change many photobook production processes. What do the Stuttgart judges have to say about this?
Martin Schirmbacher: The HRC has fortunately contradicted this view. The only key point is that the purpose of the contract is the delivery of goods made to customer specifications. Whether production of the goods has commenced or not is immaterial. The reasoning given is also sound. Indeed this case does not involve an exception where the right of withdrawal first of all exists and then lapses, but rather a standard where the right of withdrawal doesn’t exist in the first place.
So the right of withdrawal does not depend on the progress of goods production but is solely determined by the type of relevant contract.
Bernd Zipper: OK. That is some good news on the legal front for a change.
Martin Schirmbacher: Indeed. I also believe that this view will gain acceptance. Incidentally the building contractor still lost the case, but for other reasons.
Bernd Zipper: So in that respect some print providers can breathe a sigh of relief… What other issues should they heed? Are there other issues?
Martin Schirmbacher: Definitely, otherwise this would be a short interview. Although I am not exactly sure which online print providers are affected. The Higher Regional Court in Celle recently addressed a very topical issue involving influencer marketing in social media.
Bernd Zipper: So we’re talking that familiar problem of product placement…
Martin Schirmbacher: Exactly. Basically advertising must be clearly flagged as such in accordance with § 5a Par. 6 UWG (German Unfair Competition Act), even in social networks, and must contrast with the editorial content of a post. This actual case involved a photo on Instagram, which showed an influencer promoting a product offered by the Rossmann drugstore chain. A series of hashtags, including an inconspicuous “#ad”, was listed beneath the photo.
Bernd Zipper: But “ad” means advertising. Is that not sufficient for flagging purposes?
Martin Schirmbacher: The court unfortunately did not provide an answer to the question of whether “#ad” can be regarded as adequate flagging. The fact that the “ad” hashtag was the second on a list of six hashtags at the end of the post meant the post could not be identified as advertising. The judges assumed that an average Instagram user cannot be expected to take note of the hashtag in this position. Even color coding of the hashtag does not alter that.
Bernd Zipper: What form of flagging would you regard as adequate?
Martin Schirmbacher: Flagging something as “advertisement” or “advertising” is certainly sufficient. There are not yet very many rulings on the subject of less unambiguous flagging. The Regional Court in Munich stated in the past that the term “sponsored” in an online magazine is not adequate as a form of flagging. I find this ruling somewhat questionable, because most Internet users presumably are more familiar with the term “sponsoring” than with the term “product placement” as suggested by the Court. As a rule I would regard “sponsored by” as an adequate form of flagging.
What is ultimately important is that the form of flagging can be recognized as such without users having to take ages searching or scrolling down the page. That also applies to advertisements on tablets and cellphones. As soon as a video or post is displayed, it must be clear straightaway that advertising is involved too.
Bernd Zipper: So take note – too much flagging is better than too little! As far as I know, breaking the rules can cost you a lot of money.
Martin Schirmbacher: Violations can definitely be expensive. Last summer, YouTuber Flying Uwe was fined a whopping 10,500 Euros by Medienanstalt Hamburg amid a fair amount of uproar.
Bernd Zipper: Talking of money – wasn’t there a judgment about payment by PayPal? That would affect some online print store operators.
Martin Schirmbacher: Indeed! The Federal Supreme Court has ruled that a seller can still sue a buyer in court for payment of the purchase price, even if the latter has successfully claimed on PayPal’s buyer protection scheme. This buyer protection enables the buyer to make an application to PayPal if a purchased product has not been shipped or the item delivered differs radically from the seller’s product description. If the application is successful, PayPal refunds the amount paid to the buyer and at the same time debits the account of the seller for the same amount. The Court assumes that the repaid purchase price is a justified receivable if the seller’s PayPal account is redebited and the purchase price is recredited to the buyer’s PayPal account. That can essentially be derived from PayPal’s General Terms & Conditions.
Bernd Zipper: There were also reports in the press that the customer in such cases has to pay a second time. Does that not mean a considerable weakening of buyer protection? Does it even make sense at all from a buyer’s perspective?
Martin Schirmbacher: The buyer has the advantage of being able to have the purchase price refunded straightaway on application, without having to take the seller to court. If the store operator then wants to get their money back, they have to sue and they have the burden of proof.
Bernd Zipper: But this is nevertheless ultimately a positive ruling from an eCommerce business perspective. Have you got anything else for us?
Martin Schirmbacher: There is a Federal Supreme Court judgement that once again demonstrates that Germany’s top civil court judges are not the greatest fans of e-mail advertising. The case involved co-sponsoring. The FSC is of the opinion that e-mail addresses collected as part of entering a competition or downloading a freebie can only be used for advertising purposes by sponsors if the sponsors and the products, which the sponsors wish to promote, are actually named. General consent, which relates just to the sponsors, is therefore not sufficient if the products or services to be promoted are not clearly identifiable.
Bernd Zipper: So what should online marketers be aware of?
Martin Schirmbacher: Marketers that wish to generate e-mail addresses in this way must ensure that the consent they obtain is sufficiently specific. Clients should not let themselves be palmed off with assurances given by the service providers. Clients must insist on being shown what campaigns look like in detail. And the provider must commit to conducting the campaign in exactly that way.
Bernd Zipper: Then let’s look ahead to 2018. Is there any information that is of interest to online print providers?
Martin Schirmbacher: Absolutely. One regulation has already entered into force – new restrictions on fees charged for using payment methods at online stores. The new Paragraph 270a of the BGB (German Civil Code) states that all common payment methods must be free of charge to customers. Additional charges for the use of direct debits, bank transfers or credit cards are prohibited as of now. Anybody who nevertheless makes additional charges risks receiving a formal warning.
Bernd Zipper: Does that then mean that all payment methods must be offered to B2B and B2C buyers free of charge? Or are there exceptions?
Martin Schirmbacher: Consumers can be charged fees for paying with non-typical credit cards like AmEx. Things are different in the B2B segment where vendors are still entitled to charge a fee for credit card payments. As far as PayPal is concerned, the legal situation is still a grey area. However PayPal has already reacted to implementation of the Directive and changed its retailer/merchant GTCs. These now explicitly state that retailers/merchants are no longer entitled to charge a payment fee for the use of PayPal services as a payment method. Retailers/merchants that offer their customers the option of payment by PayPal are therefore not permitted for contractual reasons to charge fees for using PayPal.
Bernd Zipper: So we come to the final topic: things are slowly starting to get interesting as far as the GDPR is concerned, which is due to enter into force in May. Have you got any tips here?
Martin Schirmbacher: Get started. Now. We are receiving inquiries from eCommerce businesses every day. And it amazes me that these inquiries include some from major players. And things are slowly beginning to get really tight, as the May 25 deadline is approaching fast. Just making a couple of adjustments to IT systems or restructuring a data management platform is all it takes for companies to risk missing the deadline. The absolute minimum that companies need to undertake is draft an updated directory of all internal data processing procedures and new data privacy information for their websites. But that does not even cover a quarter of what they need to do. Every business serving customers or employing human resources should currently be executing a GDPR project.
My take: Reasonable payment fees, rights of withdrawal, advertising and data protection – relief on the one hand and burdens on the other. In legal terms, 2017 had a fair amount to offer the online print industry and 2018 is set to continue in the same vein. And as far as legal issues are concerned, I am not yet done with Q1/2018 here at beyond-print – you can look forward to the GTC check that’s coming soon. I will be taking a closer look at some print providers’ quality tolerance and guarantee statements. So stay tuned!