Summary
Summary
The Regional Court of Düsseldorf ruled against Amazon Prime, stating that the unilateral price increase for the subscription fee was unlawful under German contract law.
Amazon Prime’s subscription-based premium service is facing challenges in Germany. The Regional Court ruled that Amazon’s unilateral decision to increase a subscription-based fee for the “privilege” of using their “premium” service is contrary to German contractual Law.
Background
Back in 2022, Amazon decided to confront its “raised costs” in Germany by inserting a price-adjustment clause into its terms & conditions as part of its e-contract with German Prime’s users. The insertion of this clause “permitted” Amazon to significantly increase its subscription-based fees starting in June 2022.
Before the June increase, the yearly subscription fee for Prime’s services was EUR 69, while the monthly subscription fee was EUR 7.99. The increase changed the annual cost to EUR 89.50 and the monthly payment to EUR 8.99.
The previous insertion of the price-adjustment clause “permitted” Amazon to unilaterally increase its fee. This clause, in a nutshell, should provide legal certainty that Amazon can increase its fees for German users without needing to renegotiate contract terms with each customer. However, this level of certainty has recently been shattered by the Regional Court of Düsseldorf.
Court Rulings and Civil Law
The case was initiated after the consumer-protection authority of North Rhine-Westphalia deposited a claim before the first instance Düsseldorf Regional Court. The claimant argued that Amazon’s unilateral increase in the subscription fee for the Prime service is unlawful under German contract law.
The Düsseldorf Regional Court made a decision earlier this year in favour of the claimant, the regional customer-safeguard authority, supporting its claims that Amazon’s unilateral increase of the subscription-based fee was unlawful. Amazon appealed to the Higher Regional Court of Düsseldorf.
Only a few days ago, the Higher Regional Court of Düsseldorf upheld an earlier judgment of the first instance regional court. The court ruled that the price adjustment clause inserted by Amazon in 2022 is unlawful. This stance is supported by the civil law provisions, which state that the company cannot unilaterally increase prices under existing contracts without transparency and customer consent.
Next steps for Amazon Prime
The US e-commerce stronghold has also lost in the second instance. The Higher Regional Court’s ruling isn’t automatically binding on Amazon. The Court permits Amazon to appeal its decision before the Federal Court of Justice.
It remains to be seen whether Amazon will appeal the High Court’s ruling.
Impact of the Ruling
The Higher Regional Court’s ruling emphasized the importance of the principle of good faith in contract law. The court ruled in favour of the Regional Consumer Center, finding that Amazon’s insertion of the price-adjustment clause and later acting on it in the manner processed are unlawful.
Refunds on the way?
Given the Court’s favorable decision, affected Amazon Prime users may seek refunds for overpaid fees. To make things even more complicated for Amazon, the Consumer Center also plans to file a class-action lawsuit to enforce refunds collectively, along with penalties.
Takeaway
The latest ruling shows that rules are rules and should be followed the same way, no matter the “economic power” or “importance” of the provider of subscription-based services. The consumer-protection framework is established to protect customers from these practices.
Author: Aleksandar Delic
If Amazon chooses to appeal to the German Federal Court of Justice, that decision could set an important precedent for the entire subscription-based industry and prompt many other investigatory practices by regional customer-safeguard institutions against local or international marketplaces that offer subscription services.
Indirect Tax Manager – E-Commerce
The Higher Regional Court of Düsseldorf ruled that Amazon’s 2022 price adjustment clause, which allowed unilateral fee increases for Prime subscriptions, is unlawful under German contract law due to a lack of transparency and customer consent.
Amazon introduced the clause in 2022 to manage rising operational costs in Germany, enabling it to increase annual Prime fees from EUR 69 to EUR 89.50 and monthly fees from EUR 7.99 to EUR 8.99 without renegotiating individual contracts.
The court found that the unilateral price increase violated German civil law, which prohibits unilateral changes to contracts without mutual agreement. The ruling emphasized the importance of transparency and good faith in consumer contracts.
Yes. Although Amazon lost both the initial and appeal cases, the Higher Regional Court’s decision allows Amazon to appeal before the Federal Court of Justice, which would be the final stage in the legal process.
Affected customers may be eligible for refunds of overpaid subscription fees. The Consumer Protection Authority plans to file a class-action lawsuit seeking collective refunds and potential penalties against Amazon.
The court underscored the principle of good faith in contract law, ruling that Amazon’s unilateral modification of subscription fees without prior customer consent breached the fairness and transparency obligations in consumer agreements.