Out-Law / Your Daily Need-To-Know

ECJ says online retailers can almost never charge for use made of returned goods

Out-Law News | 10 Sep 2009 | 2:59 pm | 3 min. read

UPDATED: Online retailers can only charge a consumer for the use they made of a product which they then returned if it was used in bad faith or for 'unjust enrichment', the European Court of Justice (ECJ) has said.

The Court said that in all other circumstances retailers cannot make a charge for the use of returned goods.

Pia Messner bought a second-hand laptop online from German retailer Stefan Krüger. Nine months later the display failed and Stefan Krüger refused to repair it. Messner said she was terminating the contract, sent the laptop back and sought the repayment of the €278 she had paid for the machine.

Stefan Krüger said that it was entitled to payment for the use that Messner had made of the computer in those eight months. It said that it would have cost €118.80 to rent for three months, and that she therefore owed it €316.80.

The European Union's Distance Selling Directive governs sales where the buyer is not in the same place as the goods, such as online retail or mail order catalogue sales.

The ECJ has ruled that a German law allowing suppliers to charge a consumer for the use of a product which is later returned breaks the Distance Selling Directive. The UK's implementation of the Distance Selling Directive does not give suppliers such a right.

"The right of withdrawal is designed to protect the consumer in the particular situation of mail-order sales, in which he 'is not able actually to see the product or ascertain the nature of the service provided before concluding the contract'," said the ruling. "The right of withdrawal is therefore intended to offset the disadvantage for the consumer resulting from a distance contract by granting him an appropriate period for reflection during which he can examine and test the goods acquired."

"The prohibition laid down in the second sentence of Article 6(1) and Article 6(2) of [the Directive] must be interpreted in the light of those objectives," it said. "In that regard, it should be noted that a general requirement to pay compensation for the value of the use of consumer goods acquired under a distance contract is incompatible with those objectives."

It said that demanding compensation would "deprive the consumer of the possibility of making completely free and independent use of the period for reflection granted to him by that directive".

The ruling did say, though, that there would be some circumstances in which some compensation might be demanded.

"Although [the Directive] is designed to protect the consumer in the particular situation of a distance contract, it is not intended to grant him rights going beyond what is necessary to allow him effectively to exercise his right of withdrawal," it said.

It said that countries could have laws which would require a consumer "to pay fair compensation in the case where he has made use of the goods acquired under a distance contract in a manner incompatible with the principles of civil law, such as those of good faith or unjust enrichment".

The ECJ said that it was for the German court to decide in this particular case if the goods had been used in a way that would justify a payment.

Editor's note, 11/09/2009: When this story first appeared, it was not made clear that it referred to Germany's implementation of the Directive only – which differs from the UK's version. The ECJ ruling is unlikely to affect UK retailers.

In the UK, Regulation 17(3) of the Distance Selling Regulations states: "On cancellation, the consumer shall be under a duty to restore the goods to the supplier in accordance with this regulation, and in the meanwhile to retain possession of the goods and take reasonable care of them."

Under the UK Regulations, a supplier does have a right of action against a consumer if the consumer breaches the duty to take reasonable care of the goods; but the supplier cannot levy a charge for use during the cancellation period or any form of administration fee.

As in Germany, the UK rules also give a supplier the right to make the consumer responsible for the cost of returns. This has to be made clear in the information provided to the consumer before the contract is concluded, though, otherwise the supplier pays. Also, if the goods are faulty or do not comply with the contract, the supplier pays for returns.