Starting in July 2022, this new cancellation button regulation is a major victory for consumer rights. It aims to reduce the opaque procedures customers currently have to go through when canceling a subscription.
But what is the cancellation button? In a nutshell: It must be just as easy for customers to cancel a contract online, as it is to sign up for one.
What merchants need to know about it:
As of July 1st, 2022, an updated version of § 312k of the German Civil Code provides for a new regulation on the termination of e-commerce consumer contracts in Germany.
This new regulation applies when consumers enter into an e-commerce contract online and that contract provides for a recurring payment arrangement with an online merchant and the merchant provides goods and/or services against payment.
That’s wordy, but it basically means that the cancellation button requirement applies to companies that offer recurring digital contracts online and that are present in Germany.
Let’s take a closer look at how merchants can comply and what companies that offer digital products or services need to do.
How customers will be able to cancel contracts online:
First, there must be a cancellation button on the merchant’s website available without the need for the customers to log into their accounts.
When customers click on the cancellation button, they will be routed to a confirmation form page. On that page, they need to provide the details of the requested contract cancellation. To complete the process, they must click a confirmation button, and the cancellation request will be submitted to the merchant.
On the following final page, there must be a service option for the customers to save/download the cancellation declaration.
In addition, the cancellation declaration must be sent by the merchant electronically to the customers in text form, usually via e-mail.
Of course, consumers are not obliged to use this exact procedure for termination. They can, for example, still log into their customer accounts and cancel that way.
In what cases exactly does the law apply?
It does not matter whether the contract the customer wishes to cancel was originally agreed to electronically on a website. The crucial factor is that the consumer could have agreed to the contract on the website and – in that case – must be able to cancel it the same way.
What steps do merchants need to follow to correctly implement the cancellation button process?
Step 1: The cancellation button:
The button must be consistent and easily accessible, which is defined in the merchant’s imprint. It is important that customers do not have to log into their account first to cancel.
There are strict requirements for the button label. It must be easy to read and must not contain anything other than “Cancel contracts here” or similar in other languages. Other clear text labels for terminating a contract are permitted, but there is a risk that this alternative text could be considered unclear. A customer clicking the button only initiates the cancellation process.
Compliant examples of § 312k online cancellation button in English and German
Step 2: The confirmation page and confirmation button:
By clicking the cancellation button, customers will be transferred to a confirmation page. On this page, they are prompted to enter the following information into a form:
- The type of termination and in the case of extraordinary termination, the reason for termination
- Unique information to identify the customer, e.g. name, address
- Unique contract identification information, e.g. contract number
- Information for when the termination is intended to end the contractual relationship between customer and merchant. This is not allowed to be a mandatory field. In case that a customer does not specify a time of termination, the law provides that, in case of doubt, the termination shall take effect at the earliest possible time.
- Details for rapid electronic transmission of the termination confirmation (usually e-mail address).
No further details are required, as the goal is to provide a simple and straightforward termination process.
The confirmation page requires a confirmation button customers must click to declare the cancellation. The button must always be available and easy to read. It must be labeled “Cancel now” or other appropriately clear wording as mentioned previously.
Step 3: Storage and confirmation of termination
Storage: Once the customers have provided their information and pressed the confirmation button, there has to be a service option to save the notice including the date and time of submission.
Generally, it should be easy for customers to document the submission of the notice. A good way to do this is to provide a downloadable summary.
But this is not sufficient. The merchant must also send a confirmation of termination to the customer in text form including that:
- the notice of termination was received on said date and time, and
- at what date the specific contractual relationship will be terminated.
There is a legal presumption that the merchant receives the customer’s declaration without delay. This is also to make it easier for customers to cancel, as they have no technical insight into the contract cancellation process and don’t need any. This confirmation of termination can and almost always will be automatic.
If you are a merchant and not sure how to get started with the setup of the cancellation button, Nitrobox can help.
Terminate contracts easily with Nitrobox
Subscription management is one of the Nitrobox Platform’s key features. It enables you to create, manage, and cancel contracts automatically and meet your customers’ needs perfectly – in real-time and on one single platform.
To terminate a contract with Nitrobox is as simple as pushing a button, so to speak. First, you connect your cancellation form to the Nitrobox API. When a customer clicks the confirmation button in that form, it communicates that data to the Nitrobox Platform, and the system will terminate the contract for you automatically. Next, the system can easily report that cancellation to your e-mail automation tool (or other electronic, text-based notification) of choice to ensure that the customer will be informed about the success of the termination.
Through this, Nitrobox enables you to realize:
- Ordinary terminations: which honors the terms of the contract and the associated notice period, when one is given, or
- Extraordinary terminations: The choice of any date you and your customer agree upon for termination, given extraordinary circumstances.
Regardless of the termination chosen, Nitrobox provides the correct billing and invoicing for you and your customers:
- billing for services that are only partially provided
- issuing final invoices for partial amounts
- creating credit notes and triggering refunds for customers
For companies with a presence in Germany, the cancellation button is not an “if”, but a “when” situation. Nitrobox is here to help you quickly comply with this new regulation and will guide you through the process. Want to get started? Then explore our complete order to cash platform or book a Nitrobox demo and a free consultation today.
disclaimer: this article is not legal advice. This article is meant for informational purposes only.