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Byte - German Court rules eBay must accept returns (November 2004)

Prashanti Ravindra, Research Consultant, Galexia

Related Galexia services and solutions Specialised Legal and Regulatory Consulting. Read more » Published Internet Law Bulletin, volume 7, number 8, 2004

Germany’s Federal Court of Justice, the country’s highest civil court, has handed down its decision on the well-known eBay diamond bracelet case. The Court ruled that German customers of eBay could return goods purchased from professional traders on the online auction site without supplying a reason.

The ruling means that the Internet auctioneer is not exempt from German consumer protection legislation based on the 1997 European Directive on the Protection of Consumers in Respect of Distance Contracts (Directive 97/7/EC), which allows consumers to return goods purchased through distance contracts without providing a reason. Auctions are ordinarily exempt from these provisions under German law, but the decision means that eBay transactions are classified along with other forms of distance selling such as mail order catalogues. The decision is said to clarify a grey area in German law regarding the return of goods purchased from online auction sites.

While the ruling does not apply to direct sales between individual buyers and sellers, it does offer protection when a consumer is dealing with a professional trader and does not have the opportunity to see the goods before delivery.

The Court ruled that ‘the consumer who buys a product in an Internet auction is exposed to the same risks as in other forms of distance selling’, and went on to note that exemptions to these consumer protection rules should therefore be limited.

Some commentators have also said that the case may have Europe-wide ramifications as the decision is based on an EU Directive. Concerns over the ruling placing extra burden on small business operators wanting to start an online business have also been expressed.

The case involved the purchase of a diamond bracelet on eBay, however the jeweller who sold the product was not paid because the purchaser was not satisfied with the product.

The case reference is VIII ZR 375/03.

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