On May 30, 2024, the European Court of Justice (“CJEU”) ruled that any button a consumer uses to order a service online must clearly indicate that the consumer commits to pay the price for the relevant service by affirmatively clicking on it. (Conny Case C-400/22) At issue was whether this requirement applies in cases where the consumer’s obligation to pay the trader is subject to the trader meeting a specific condition specified in the contract. The CJEU confirmed that the rule applies in such cases.
The Conny case involved a tenant (i.e., consumer) who entered into an online contract with a debt collection agency (i.e., trader), pursuant to which the agency could enforce on the tenant’s behalf certain rights the tenant had against a landlord under German law. Specifically, the tenant would pay the agency its fee only if the agency successfully enforced the tenant’s rights or transmitted a letter of formal notice to the landlord. This was made clear in the contract that the tenant signed with the agency.
When agreeing to the services online, the tenant ticked a box to accept the online contract and was asked to click on a button to place the order for the service. The button did not expressly say that the tenant was committing to pay a fee to the agency by clicking on it.
The EU Consumer Rights Directive requires that a button or similar measure that invites a consumer to place an order expressly mention the consumer’s obligation to pay the price for the relevant service or product and, if not, the consumer is not bound by the contract, i.e.,:
“The trader shall ensure that the consumer, when placing his order, explicitly acknowledges that the order implies an obligation to pay. If placing an order entails activating a button or a similar function, the button or similar function shall be labeled in an easily legible manner only with the words ‘order with obligation to pay’ or a corresponding unambiguous formulation indicating that placing the order entails an obligation to pay the trader. If the trader has not complied with this subparagraph, the consumer shall not be bound by the contract or order.” (Article 8(2))
The landlord was not happy that the agency was representing the tenant. The landlord argued before a German court that the contract between the tenant and the agency was invalid under EU consumer law because the agency did not comply with the above EU consumer law as transposed into German law, and therefore could not represent the tenant. The German court then requested the CJEU to consider whether the above requirement applied in this case, where the tenant’s obligation to pay was contingent on the agency successfully enforcing the tenant’s rights or sending a letter of formal notice to the landlord.
The CJEU confirmed that the above-mentioned EU rule also applies in this case. The CJEU also ruled that the consequence of this is not that the contract is invalid, as the landlord had claimed, but that the contract does not bind the tenant. However, upon receiving additional information about his or her obligation to pay, the tenant can later decide whether they wish to make the contract binding.
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Covington’s Data Privacy and Cybersecurity Practice regularly advises on European consumer law and litigation at the European Court of Justice. If you have any questions about the implications of these rulings for your business, please let us know.
(This post was written with the assistance of Alberto Vogel).