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Distance Selling Act

The legal Situation since 1.6.2000

For the protection of consumers the EU adopted the Distance Selling Directive. Austria has implemented this directive by amending the Consumer Protection Act (Konsumentenschutzgesetz). The new provisions, also known as the "Distance Selling Act" (Fernabsatzgesetz), entered into force on 1 June 2000.
 

They cover the following areas:

  • traders' obligation to provide and confirm information,
  • consumers' right to withdraw from contracts,
  • time periods for supplying the goods or services,
  • protective provisions in cases of credit card fraud.
     

What is a distance selling contract?

A distance selling contract is defined in section 5a of the Consumer Protection Act as a consumer transaction during which there is no physical encounter between the parties to the contract but which is carried out by using one or several means of distance communication: catalogue/order form, telephone, e-mail or the Internet, etc. The seller/supplier must use a distribution or supply system designed specifically for distance selling.

  • Mr. X has locked himself out of his flat. His key is inside on the keyboard. He knows a locksmith who has worked for him before and calls his shop. He arranges with the secretary for the craftsman to come round in an hour to unlock the flat. This is clearly not a distance selling contract even though the order was placed by telephone.

  • The same misfortune happens to Ms. Y. As she does not know a locksmith, she leafs through her neighbour's yellow pages. There she finds the number of a locksmith service which can only be contacted by telephone, through a call centre. Ms. Y is clearly about to conclude a distance-selling contract.
     

What is excluded?

However, section 5b of the Consumer Protection Act generally excludes the following types of contracts from the protection afforded by the new provisions:

  • contracts on financial services (banking, insurance and securities transactions),
  • contracts on the construction and sale (but not on the rental) of real property,
  • contracts concluded using automatic vending machines or automated commercial premises,
  • auctions.

Furthermore, according to sections 5c subsection 4, 5d subsection 3, 5f paragraph 7 and 5i subsection 3 of the Consumer Protection Act, the key provisions of the Distance Selling Act do not apply to:

  • home delivery services (i.e. the supply of food, beverages or other household goods intended for current consumption supplied to the consumer's premises by regular roundsmen)
  • leisure time services (i.e. services in the areas of tourism or leisure time activities, if the supplier undertakes to provide the service at a specific time or within a precisely defined period)
     

Examples of exempt "home delivery services":

  • pizza delivery services,
  • fuel oil deliveries,
  • home delivery services by supermarkets.
  • pizza delivery services,
  • fuel oil deliveries,
  • home delivery services by supermarkets.
     

Examples of exempt "leisure time services":

  • booking a package tour via the Internet,
  • booking train or plane tickets by telephone,
  • renting a holiday home via the Internet,
  • ordering opera tickets by telephone.
  • booking a package tour via the Internet,
  • booking train or plane tickets by telephone,
  • renting a holiday home via the Internet,
  • ordering opera tickets by telephone.
     

Cross-border transactions

Distance selling often involves cross-border transactions. Questions such as where to sue and which law will apply are not covered by the Distance Selling Act but are the subject of international agreements (European Civil Jurisdiction Convention) or of Private International Law (Convention on the Law Applicable to Contractual Obligations). Within the EU, the relevant national provisions have been harmonised under the Distance Selling Directive. If, however, the seller/supplier's seat is outside Europe, consumers cannot automatically expect that their lawsuit before an Austrian court will be successful or that the Distance Selling Act will be applied by a court in the country where the company has its seat.

Duty to provide information

According to section 5c of the Consumer Protection Act, the seller/supplier must provide the consumer with the following key information before the contract is concluded:

  • company's name and address for service,
  • main characteristics of the goods or services,
  • the price of the goods or services, including all taxes,
  • any delivery costs,
  • details of payment and delivery/performance,
  • right of withdrawal,
  • the cost of using means of distance communication if they are not calculated at the basic rate,
  • the period for which the offer or the price is valid, as well as
  • the minimum term of the contract if it covers a continuous or recurrent service.

This information must be clear and easy to understand. While there is no requirement to provide this information in German, it can be assumed that it is to be in the same language as the advertisement or offer.

Duty to confirm the information provided

If a contract is concluded, section 5d of the Consumer Protection Act provides that the information mentioned above (except the last three points) must be confirmed in writing while the contract is being performed or when the goods are delivered. Information contained on a "permanent data carrier" (e.g. disks, CD ROMs, etc.) is considered to have been provided in writing. The only exception to this obligation applies if the relevant information was already provided in writing or on a "permanent data carrier" before the contract was concluded.

The trader must also transmit the following additional information in writing or on a "permanent data carrier":

  • information on the conditions and details of the consumer's right of withdrawal,
  • the geographical address of the seller/supplier's establishment where the consumer may registers any complaints,
  • information on after-sales service and applicable guarantee conditions, as well as
  • conditions for termination if the contract is concluded for an indefinite period or for a period of more than one year.

An exception applies to services provided through premium-rate telephone numbers. If such services are provided immediately and if the billing is done through the consumer's telephone bill, it is sufficient if the consumer is told the geographical address of the seller/supplier's establishment. (This exception, however, does not apply to sex hotlines for whose services consumers are billed directly, as in the case of IBC.)

If the trader fails to comply with this duty to provide and confirm information, he/she is subject to an administrative fine and may - as of 1 January 2001 -be sued by VKI, or by the injured consumer (for damages). Failure to confirm the information additionally leads to an extension of the withdrawal period to three months.

Right to withdraw

The provisions covering the right of withdrawal are full of loopholes. In addition to the exceptions discussed above, no such right exists in the following cases according to section 5f of the Consumer Protection Act:

  • services the supply of which begins within seven days of conclusion of the contract, provided that this was agreed with the consumer and that the consumer was informed of the resulting loss of his/her right to withdraw;
  • goods or services whose price depends on the development of financial market ratings, which are outside the trader's sphere of influence;
  • goods produced to the customer's specifications which are clearly tailored to his/her specific needs, whose nature makes them unsuitable to be returned, which spoil easily, or whose expiry date would be exceeded if returned;
  • audio or video recordings or software if the consumer has broken the seal on the delivered goods;
  • newspapers, periodicals and magazines, except subscription contracts;
  • betting and lottery services.
     

There is therefore no right to withdraw from contracts covering:

  • insurance policies, banking services or orders for securities;
  • bookings for flights, railway journeys, package tours, holiday homes;
  • the delivery of pizza, sushi or Wiener Schnitzel;
  • the supply of software or audio/video tapes once the seal has been broken;
  • the delivery of newspapers or magazines;
  • the supply of items of clothing produced specifically at the customer's request;
  • the use of premium-rate telephone numbers (e.g. sex hotlines);
  • the provision of Internet access if the service is provided within seven days by agreement with the consumer, and if the consumer has been informed that this results in the loss of his/her right to withdraw. 


The right of withdrawal does apply to:

  • typical orders from mail-order catalogues (clothing, toys, household supplies);
  • CDs, videos and computer games whose seal is still intact;
  • subscriptions to newspapers and magazines;
  • contracts with Internet service providers if the provider does not provide access within seven working days;
  • contracts with Internet service providers if the service begins to be available within seven days as agreed with the consumer and if the consumer has not been informed of the resulting loss of his/her right to withdraw.

According to section 5e of the Consumer Protection Act, the withdrawal period is seven working days if the consumer was correctly informed (see obligation to confirm information, above).
This period starts to run on the day of delivery (for goods) or on the day on which the contract is concluded (for services). Saturdays do not count as working days.

The day which triggers the time period (delivery or conclusion of contract) does not count. It is sufficient to post the withdrawal notice on the last day of the time period.

Withdrawal period

The period for withdrawal is calculated differently under sections 5e (distance selling) and 3 (doorstep selling) of the Consumer Protection Act:

distance selling: "7 working days"
time period begins on Monday, 14 February 2000
time period ends on Wednesday, 23 February 2000

doorstep selling: "one week"
time period begins on Monday, 14 February 2000
time period ends on Monday, 21 February 2000

If, however, the seller/supplier has not complied with his/her obligation to confirm the information given (see above; e.g. if the consumer has not been informed of his/her right to withdraw, or similar), the consumer may declare his/her withdrawal within 3 months of delivery of the goods or conclusion of the contract (in the case of services).

If the trader complies with his/her obligation to confirm information within this three-month period, the consumer may still declare his/her withdrawal from the contract within seven days of receiving this information.

If the consumer withdraws from the contract, then, according to section 5g of the Consumer Protection Act,

  • the trader must refund any payments made and reimburse the consumer for any reasonable and necessary expenses incurred, and
  • the consumer must return to the trader any goods received, as well as pay him/her adequate remuneration for their use and compensate him/her for any resulting loss of market value; the mere fact that the goods have passed into the consumer's custody alone does not constitute a loss of value.

The consumer may only be charged for any costs directly connected with returning the goods if the parties have expressly agreed on this (possibly as part of the General Terms and Conditions).

If a loan was granted for the purchase price or if a third party financed the purchase price, and if this constituted an integral part of the contract of sale, the consumer's right to withdraw extends to the loan agreement; according to section 5h of the Consumer Protection Act, any payments already made in this connection must also be mutually returned.

Delivery period

According to section 5i of the Consumer Protection Act, traders in distance selling transactions (for exceptions, see above) are obliged to inform the consumer immediately if they do not wish to accept the consumer's offer (order) or if they cannot execute this order because the goods or services ordered are not available. Any payments already made are to be refunded in this case.

If the trader accepts the consumer's offer, and be it only by delivering the goods, and if no specific delivery period was agreed, the delivery must happen within 30 days of receipt of the order.

If the trader fails to deliver within this period, any contract already concluded becomes void. In this case the consumer is not required to set an additional time period or to specifically declare his/her withdrawal. The trader must refund any payments the consumer has already made.

Remark:
It would also be possible to interpret this 30-day period as a statutory delivery period and to argue that, in the case of late delivery, the consumer can only cancel the contract after setting an appropriate grace period and after this period has elapsed without delivery, too.

This interpretation, however, would mean a deterioration of the protection afforded to consumers: if the contracting parties do not agree on a delivery period - which is a prerequisite for section 5i, subsection 1 of the Consumer Protection Act to apply - the consumer could demand immediate delivery according to section 904 of the Civil Code (ABGB).

Under section 51, subsection 1 of the Consumer Protection Act, however, the trader would be granted the considerable supply period of 30 days and the consumer would then have to set an appropriate period in addition to that. The consumer would thus be bound by the contract much longer than he/she would be under the Civil Code. Test cases will have to be brought to clarify this question.

Credit card fraud

In the past, there were two different ways of paying by credit card: the consumer presented the card and either signed a slip or used a PIN code. Nowadays, however, credit card companies want a piece of the distance selling cake and have therefore made it possible to carry out legally valid transactions solely by giving one's name and credit card number.

As long as it is the owner of the credit card who carries out the transaction, this is a convenient method of payment. It can backfire, though, if an unauthorised third party uses the credit card data; after all, it is impossible to keep a credit card number secret: it is accessible to any waiter or receptionist at any hotel or restaurant where you used your credit card, let alone to any hacker in the Internet, and thus subject to fraudulent use.

Section 31a of the Consumer Protection Act provides that the card holder may demand of the card issuer to be credited with or repaid for any payments made as a result of fraudulent use of his/her credit card data in connection with distance selling transactions. None of the numerous exceptions mentioned above apply here and this provision is also valid in the case of transactions between traders; furthermore, this right cannot be contractually excluded vis-à-vis consumers.

Credit card companies primarily expect their customers to check their credit card statements immediately and carefully and to raise any objections to unjustified items within certain periods (cf. the respective General Terms and Conditions).

  • Never use your credit card number on the Internet without encoding it. Unprotected payments are fair game for hackers. Credit card companies are promoting the SET system as a safe way of paying by credit card on the Internet.

  • Always immediately and carefully check your credit card statements for any fraudulent transactions by unknown third parties.

  • Should you find inexplicable items, be sure to object to them immediately (by registered letter), demanding a refund of the amounts charged.

 

Federal Law Gazette (BGBl) 185/1999

 

VKI Legal Department
Vienna 1.6.2000