The Bundestag passed Germany’s Gesetz gegen unseriöse Geschäftspraktiken (the law against dubious business practices) on 27 June 2013. It targeted cold calling, debt collection and mass copyright warning letters, and it took effect in October 2013. Its main effects were a fine of up to 300,000 euros for unsolicited advertising calls and a cap on the lawyers’ fees a consumer can be asked to pay for a first copyright warning.
Why the law was passed
The government’s draft, published in April 2013, said citizens kept complaining about dubious practices in debt collection, telephone advertising and the warning-letter (Abmahnung) system. The draft described these areas as linked. Some collection claims, for example, grew out of contracts that were pushed on people by phone, and in some cases no call had taken place at all.
The Bundestag passed the bill on 27 June 2013. The Bundesrat let it through on 20 September 2013. It was published in the Federal Law Gazette on 8 October 2013 and took effect the next day, 9 October 2013.
Cold calls and phone contracts
- Higher fines. From 9 October 2013 the maximum fine for unlawful advertising calls was 300,000 euros. The earlier limit, in force since August 2009, was 50,000 euros.
- Automated calls. Advertising calls made by automatic dialling machines were already prohibited under section 7 of the Unfair Competition Act (UWG). The new law also made them an administrative offence under section 20, which allowed fines.
- Prize-draw services. Contracts for services that enter people into prize draws now need text form under section 675(3) of the Civil Code. A contract agreed only by telephone is therefore not effective. The government’s reasoning was that complaints about such contracts made up a large share of consumer complaints.
Commentators noted that the new rules on phone contracts were fairly moderate, because the text-form requirement applied only to prize-draw services. Consumer groups had asked for a confirmation requirement covering all contracts agreed during unlawful calls.
Copyright warnings and fee caps
The law rewrote section 97a of the Copyright Act (UrhG), and its main target was mass warning letters, especially over file sharing. A warning letter must now state clearly the following:
- who the injured party is, if a representative is sending the letter;
- exactly what infringement is alleged;
- how any payment demands break down into damages and expenses.
A letter that does not meet these requirements is ineffective.
The central change was the fee cap. For a consumer’s first warning, the value in dispute for an injunction or removal claim is normally capped at 1,000 euros. Lawyers’ fees are calculated from that figure. Commentators put the resulting cost at about 155.30 euros including VAT, or about 124 euros net. Before the reform, the old section 97a had a 100 euro limit for simple cases. Critics said it rarely worked in practice, partly because of its vague wording.
A new section 104a of the Copyright Act also gives consumers a home-court advantage. In copyright suits against consumers, the court where the defendant lives is normally the one with jurisdiction.
Debt collection and unfair competition
Debt collection firms faced stricter supervision. The maximum fine for breaching their information duties rose from 5,000 to 50,000 euros. Authorities were also given powers to restrict a business temporarily or in part.
A proposal to end the “flying” place of jurisdiction in unfair competition cases had caused controversy before the vote. In 2013 that change was dropped for the time being, and the legislator announced a review. For unsolicited advertising messages such as email marketing, the law also tightened the labelling duties. Advertising messages had to be identified as commercial communication under the Telemedia Act.
FAQ
When did the law take effect?
It was published on 8 October 2013 and applied from 9 October 2013. Some new information duties for debt collectors came with a transition period.
Did it end all warning-letter costs for consumers?
No. It limited the fees for a first warning to a consumer in the usual case. Warning letters remain possible, and anyone who receives one should seek advice from a lawyer or a consumer advice centre.