Hardly any topic is more dreaded in e-commerce than a written legal warning concerning competition law. Written legal warnings are a German peculiarity. In other countries, you will hardly find them. In essence, a legal warning means that a competitor pursues a violation of competition law regulations against a rival company through private law proceedings. To do so, they can hire a lawyer and charge the defendant with the costs. Accordingly, even small infringements of competition law can trigger costs in the upper three-digit range.
The practice of issuing warnings under competition law is not limited to e-commerce. Nevertheless, the phenomenon is particularly well known in this industry because legal violations are easily found online. Numerous court rulings that have already examined certain legal violations further simplify the matter. As a result, senders of written legal warnings in e-commerce can be quite certain which warnings would stand up in court. It is therefore very important for online retailers to know the biggest pitfalls and how to avoid them.
No. 1: Missing OS-Link within the Imprint
Having an imprint should be a given by now. Something that is sometimes overlooked, however, is the so called OS-link. The OS-link refers to a link to the EU’s Online Dispute Resolution Service for consumer law matters (in German: Online-Streitbeilegungsstelle). The dispute resolution service is intended to ensure that disputes between retailers and consumers can be resolved quickly and amicably without the involvement of a lawyer.
In reality, however, these arbitration bodies hardly play a role. A potential reason behind this could be the fact that companies are not obliged to participate in such proceedings. Nevertheless, the imprint must inform about this option and provide a link to the arbitration board where consumers may describe their problem.
No. 2: Incomprehensible Shipping Details
When you’re in for e-commerce, you’re also in for shipping. When it comes to shipping terms, there are several hurdles along the way. Firstly, the Price Indication Ordinance in Germany obliges retailers to indicate the accurate sum of shipping costs. Statements such as “shipping costs upon request” are not permitted.
In addition, it must be evident from the product price at first glance whether shipping costs are added or are already included. This way, consumers are supposed to see at an early stage what the bottom line costs will be.
The shipping details must also indicate the countries to which the products are shipped.
Caution: When you offer “worldwide shipping”, this will be taken literally. In case of doubt, you would be obliged to deliver to a hermit in the Australian outback.
Furthermore, companies are generally allowed to set different shipping costs. Thus, shipping to country A may cost five euros and shipping to country B is ten euros. Shipping to country C may even be free of charge, whereas this might apply to country D only for orders over 50 euros. It is important that the costs are presented transparently, clearly and understandably.
No. 3: Missing and False Base Price Information
The declaration of a base price is supposed to simplify price comparisons. Customers should be able to compare whether the yogurt in the 500-gram pot is cheaper than the one in the 150-gram pot.
In e-commerce, it is important to ensure that the base price is indicated in proximity to the gross price. It is vital, however, that consumers understand that the stated base price is really just the base price. Therefore, it should not be highlighted and must be visually recessed. A reasonable practice is to indicate the base price directly below the gross price.
Products that are sold by volume, weight, length or square are always required to have a base price.
Caution: Products whose nominal volume or nominal weight usually amounts to a maximum of 250 millilitres or grams, were, until recently, subject to the exemption that the base price may be indicated per 100 millilitres or grams. This exemption has been ruled out in May 2022. Since then, the base price in these cases must also be indicated per kilogram or litre. For products sold by length or square, the price is indicated per metre or square metre.
No. 4: The Use of unauthorized Health Claims
The Health Claims Regulation (German abbrev.: HCVO) regulates which health-related claims may be made for certain products. This is to prevent customers from being lured into a shop by false promises of a cure.
Since the HCVO is about health care, it is interpreted quite strictly. For example: the annex to the HCVO states that vitamin C may be advertised with the claim that the compound helps to reduce fatigue. If orange juice is sold, it may therefore be advertised with the statement
that the vitamin C contained in a glass helps to reduce fatigue. However, the statement that orange juice helps to reduce fatigue would be inadmissible, as the HCVO only allows the claim to be made in relation to vitamin C.
But who actually determines which advertising claims are permissible? When the HCVO was launched, food manufacturers from all European Member States had the opportunity to submit proposals. The European Food Safety Authority then was charged with the task of scientifically verifying the advertising claims submitted. Due to the large number of submissions, it took the authority five years. In the end, 222 health claims made it into the regulation. Since then, the list has been constantly expanded. If a manufacturer wants to establish an advertising claim that is not provided for in the regulation, he must apply for approval.
Three inadmissible advertising claims in particular are repeatedly subject to legal warnings:
Detoxifying effect: The first claim is that a certain food has a detoxifying effect. However, the Health Claims Regulation does not recognize the term “toxins”; accordingly, foods may not be advertised as having a detoxifying effect. Such a statement will probably not make it into the annex of the regulation either, because the existence of toxins has no foundation in science. This was stated in 2006 by the Karlsruhe Higher Regional Court (judgement of 13.07.2006, file number: 4 U 12/04).
Digestible beer or digestible wine: Although the court ruling on digestible beer has been covered by the media, many retailers still attribute this quality to beer or wine. In general, Article 4 of the HCVO prohibits any health claims for products containing alcohol.
Stress-relieving or relaxing: These claims are particularly popular for tea. In theory, there is nothing wrong with saying that a customer can relax over a cup of tea. However, this relaxing effect may not be attributed to the tea itself. The HCVO only knows the word “stress” in the context of “oxidative stress” in connection with compounds such as zinc, manganese and copper. “Relaxing”, on the other hand, does not appear at all.
No. 5: Errors within the Cancellation Policy
Errors in the cancellation policy will be the closing chapter of this little overview. It is now common knowledge that a cancellation policy is required. Therefore, in practice, warnings are more likely to be issued because of phrasing errors.
Unlawful exclusions of the right of cancellation are particularly often the subject of legal warnings.
For example: it is often claimed that the right of cancellation is generally excluded for individualized goods. However, this is not correct. Ultimately, what matters in the case of individualized goods is whether the retailer can resell the product in the event of a return.
This is the case, for example, if customers can design a T-shirt from a range of motifs and colours. The situation is different, of course, if family photos or names are printed on the product in some way. In such a case, the right of cancellation may indeed be excluded.
Hygiene products are another problem that arises: Here, the law provides that the right of cancellation may be terminated prematurely when a hygiene seal is broken. The terminology of hygiene products is, however, quite often misinterpreted. A hygiene product does not simply become such a product by virtue of the seal. The right of cancellation only terminates in cases where the return is not acceptable for health protection or hygiene reasons. This may be the case with cosmetics, for example, but not with mattresses or sex toys.
Summary: Let’s get it right from the start
The best strategy for online retailers is to get it right from the start. In particular, legal texts such as the general terms and conditions, cancellation policy, imprint and data protection statement should never be copied from the internet. As this article shows, legal texts often depend on details and in many cases, these details are highly individual.
That is why Händlerbund offers the service to adapt legal texts exactly to the retailers’ portfolio. To ensure that nothing can go wrong in the end, a comprehensive shop inspection may also be conducted. For that, a specialized lawyer takes a close look at the online shop and points out any risks of legal warnings.
If a written legal warning is still issued, Händlerbund will of course help, even in retrospect.
Benefit from the opportunity to have a personal consultation at the E-Commerce Expo Berlin 2023. You will find Händlerbund at stand D3.4.
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About the author:
Sandra May from OnlinehändlerNews
Sandra has been a legal editor at OnlinehändlerNews since 2018. Instead of gathering dust at a law firm, she decided to take the rather unconventional route into marketing. Breaking down legal matters to a level that laypeople can understand it is right up her alley. In addition to current e-commerce rulings, OnlinehändlerNews also offers exciting industry insights and the latest from the digital tech sector.