The Higher Regional Court Munich declares Amazon-Dash-Buttons to be contrary to consumer protection law

Phillip Hofmann General Data Protection Regulation Leave a Comment

The Higher Regional Court (OLG) Munich (decision of 10 January 2019 – 29 U 1091/18) has decided that the conclusion of a consumer goods purchase via the Amazon-Dash-Button is intransparent and the contractual provisions unreasonably disadvantage the consumer. It has therefore condemned Amazon to refrain from its business practice at the request of the North Rhine-Westphalian center of consumer protection (“Verbraucherschutz-zentrale NRW”). It is not to be expected that the decision of the Higher Regional Court will constitute an obstacle to innovative business models. On the contrary, the implementation of the legal requirements will make a decisive contribution to “multichannel shopping” in line with consumers’ and service providers’ interests.

The following article summarizes the court’s decision and provides information on how the transparency requirements can be implemented into the Dash-Button in a legally secure manner.

1. Functionality of the Dash-Button: Intuitive.

The Amazon-Dash-Button allows you to order “Amazon-products” at the touch of a button. Via the Amazon app, you can link it to the individual product of your choice. The desired features of the product (brand, size, color, etc.) can be specified during the setup process of a button. You attach the Dash-Button in the vicinity of the product and can then quickly reorder it. The button transmits the order to Amazon and simultaneously sends an order notification to the customer’s smartphone. The order itself can no longer be influenced via the app. Only the processing status can be tracked and a (temporary) cancellation of the order is possible.

2. Conclusion of the contract of sale: Intransparent.

According to the latest decision of the OLG München (decision of 10 January 2019 – file no. 29 U 1091/18), Amazon may no longer offer the Dash-Button in this form, as the legally binding information on the conclusion and content of the contract is not communicated sufficiently clearly in the course of this distance selling transaction.

Above all, there is a lack of the clear indication required by law in e-commerce that the activation of the button triggers an order subject to payment. According to Section 312j (3) clause 2 German Civil Code (“BGB”), if this button is marked in an easy-to-read manner with nothing else but the words “Order and Pay” (“zahlungspflichtig bestellen”), or with equally unambiguous wording. Otherwise, a consumer contract will not be concluded in electronic business transactions (Section 312j (2) BGB). In the opinion of the court, the Dash-Button does not meet these requirements, as it is only a button and “brand” in terms of design.

In electronic business transactions, the consumer must also be provided with essential information about the transaction before conclusion of the contract, including, for example, the contractual partner, essential characteristics of the goods ordered, if possible the total price including shipping costs (Section 312j (3) clause 2 BGB in conjunction with Art. 246a Section 1 (1) clause 1 no. 1, 4, 5, 11, 12 Introductory Act to the Civil Code, “EG-BGB”). The Regional Court Munich I already considered this to be not fulfilled in the previous instance (file no. 12 O 730/17), since Amazon does not provide the customer with this in-formation immediately before or when pressing the Dash-Button and the order notification via the app is not sufficient. Amazon’s argument that the customer received the necessary information already at the time the Dash-Button was set up in the app did not convince the court. It replied that Amazon reserves the right in this context to subsequently change essential product details such as the price or to replace the ordered product with an equivalent product in the event of non-availability. Apart from that, the purchase of a product may only take place long after the Dash-Button has been set up.

Finally, the intransparency of the clause also results in an inappropriate notification of the customer (Section 307 (1) clause 2 BGB), in particular since it is not clear to the customer which offer and product details could change with subsequent orders and that, if neces-sary, an alternative delivery of an alternative product could also occur.

3. The effect of judicial decisions: Innovation-enhancing.

The deliberations of the courts are convincing. The aim of innovative distribution technologies must be to enable the customer to conclude an informed contract by consciously deciding which product, in which specification and at what price to purchase. In this respect, Amazon could probably offer the Dash-Button in a legally compliant way with only a few adjustments:

For example, the legally binding ordering process could be moved forward to the configuration process of the button in the app. All essential information could then already be communicated to the consumer there. If necessary, an optional obligation (“Wahlschuld”) could also be agreed in order to enable the supply of alternative products if necessary. The activation of the Dash-Button would then only be understood as a concretization of the delivery date by the customer.

Alternatively, the products could first be placed in the shopping basket in the smartphone app at the push of a button and then – after all the necessary information has been made available – ordered from here with a further tap. In view of the fact that, according to a Deloitte study, people between the ages of 18 and 24 look at their smartphones 56 times a day on average, this should not greatly delay the ordering process or cause particular discomfort. Otto has been testing a similar solution under the name “Otto Product Assis-tant” since 2015. This is a sticker based on “Near Field Communication” (NFC) technology. By establishing radio contact between the smartphone and the sticker by moving the smartphone along, a service page opens with the most relevant information about the object of purchase stored in the product chassis. The classic ordering process can then be initiated via the service page.

4. Further development: From “Interim Technology” to “Internet Of Things”.

However, Amazon is apparently also aware that the Dash-Button is only a “placeholder interim technology”, by means of which the customer’s willingness for innovative ordering options is to be researched or created. Amazon itself is already on the market with the so-called “dash replenishment service”. With this cloud-based service, devices can automatically reorder consumables without any concrete action on the part of the customer. To this end, the service provider cooperates with various partners, including household appliance manufacturers and printer manufacturers, who integrate the service into their networked devices. Amazon itself then provides the necessary backend infrastructure, authentication and payment services as well as customer service and logistics network. According to the terms of use, the service is now also available in Germany. In addition to these “subscription solutions”, not least the product manufacturers themselves will in future endeavour to develop “everywhere-commerce” solutions in which the customer can determine exactly what, when, how and where to buy. This will strengthen the customer’s brand loyalty and safeguard their independence from intermediaries such as Amazon. For example, appropriate ordering technology could already be integrated into the product packaging. Pickup could take place at any time in 24/7 self-service centres at the super-market around the corner.

5. Conclusion

Future technologies will avoid Dash-Button problems such as furniture aesthetics, questionable customer authentication, limited product selection and specification, lack of comparability and advice, risk of blind and multiple orders, and price instability in order to meet customers’ individual needs as easily as possible. For this purpose, a higher complexity of selection decisions must be represented in an intuitive way. Further interesting legal disputes should be literally pre-programmed here. As the decision of the Higher Regional Court Munich shows, legal practice has an essential adjustment function in this technical evolution process.

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