New law makes companies offer shorter contracts and easier cancellations
Whether for gyms, streaming services, internet or mobile phones, inflexible contracts with long notice periods have long been a pain point for many expats in Germany. The good news is that a new law, in effect from March 1, should make cancelling contracts a whole lot easier.
Renewed contracts can now be cancelled with one month’s notice
In all likelihood, we’ve all been there: you forget to cancel a contract in good time and have it extended by a year. If you miss the next deadline, you can get stuck in a kind of never ending loop. Thankfully, this should no longer be possible in future, after the German government passed the Fair Consumers Contracts Act.
For contracts concluded on or after March 1, 2022, consumers cannot be locked into lengthy contracts if their original agreement renews. Anyone who doesn’t cancel in time will instead be put on an unlimited contract with a one-month notice period. This has been the case for telecommunications contracts since December 2021, but will now apply to other contracts as well, including gym memberships and streaming services. Contracts for insurance are not included in the new rules.
Note also that the new regulation does not apply to contracts concluded before March 1, 2022, with the major exception of mobile phone and internet contracts. If you signed a contract before this date and wish to switch providers, you will still have to remember to cancel it in good time once your original contract term finishes.
Companies must offer 12-month contracts and shorter notice periods
The new law will also shorten minimum notice periods. Instead of allowing providers to demand up to three months’ notice - which has been the norm for a long time now across multiple industries in Germany - the law will now stipulate that future contracts can be terminated with a notice period of one month before the end of the initial contract term. Again, this does not include insurance contracts.
Another major change is that, alongside the 24-month contracts that are the norm in Germany, providers will also be required to offer a 12-month alternative that can be a maximum of 25 percent more expensive. For instance, a gym could offer a 24-month membership contract for 20 euros per month, but they would also have to offer a 12-month contract for no more than 25 euros per month.
All companies in Germany must have a contract “cancellation button”
A further update will also make cancellations less of a headache for consumers. All providers are now asked to include a so-called “cancellation button” on their websites. This should make it easier for customers to cancel existing contracts in a few clicks, rather than having to, for example, submit a request in the post.
Providers will also be obliged to immediately confirm receipt of the cancellation request, for instance via email, so that the customer can be sure their termination notice has been received. Both German and international companies must introduce the button by July 1, 2022 at the latest. The regulation also applies to contracts that were concluded before this date.