Consumer Protection

• Author: International Law Group

On November 3, 2004, the Eighth Chamber of the German Federal High Court [Bundesgerichtshof] held that consumers who purchase items at Internet auctions from commercial vendors have, under certain circumstances, the right to annul the purchase.

The plaintiff is a commercial vendor of jewelry who offered though eBay a "15 carat diamond bracelet" at an auction for EURO 1. The defendant made the highest offer, but later refused to accept the item when he found out that the "diamonds" were artificial, and the "gold" was actually gold-plated. The Federal High Court found that German consumer protection laws apply to such transactions when the vendor is a merchant.

Section 312(d), paragraph 1, of the Federal Code (Bundesgesetzbuch, BGB) grants consumers who buy products or services "remotely" (i.e., not "face-to-face" so to speak, such as by telephone or mail) from a commercial provider a qualified right to cancel the transaction. That Section, however, specifically excludes application to "auctions."

The Court then addresses the question whether an online auction, such as the type conducted by eBay, is an "auction" within the meaning of the Federal Code. Under BGB Section 156, sentence 1...