More haste, less speed – Amazon Dash button held to be in breach of consumer law

Written on 26 Mar 2019

A court in Germany has upheld the decision that the Amazon Dash button is unlawful because the button was not labelled “pay now” and other mandatory pre-contractual information was absent. The judgment is a reminder that while publishers may want in-game purchases to provide a slick user experience, they also need to ensure that they comply with consumer protection law, including local variations in different EU Member States.

EU law requires companies who sell directly to consumers to provide certain pre-contractual information. This is to ensure that consumers are treated fairly and understand when they are about to enter into a binding contract which requires them to pay. The relevant EU legislation is the EU Consumer Rights Directive 2011/83. As this is a directive (rather than an EU regulation) each member state is required to implement these rules into local law. However, member states have some discretion on exactly how to do this.

The German legislation implementing Article 8(2) of Directive 2011/83 states that the button “must be labelled with nothing but the words ‘order with obligation to pay’ or equivalent wording”.

The German court found that the Dash button, which simply shows the relevant brand logo and has no wording on it, breached this requirement and failed to provide mandatory pre-contractual information.

Make your buttons count

The burden of regulatory compliance, including compliance in respect of consumer protection and in-game (including in-app) purchases has never been greater in the mobile and video games sector. Games are increasingly free-to-play, with revenue opportunities arising through micro transactions and virtual currency. As with the Dash button, in-game purchases are designed to be convenient and simple so as to create a seamless user experience. However, there is a risk that in over simplification could lead to the use of payment methods which are unlawful in one or more EU jurisdictions. As noted above, Member States have discretion on how they implement the Consumer Rights Directive. As a consequence, the exact wording of the obligation varies and this potentially has consequences for how significant the ruling will be in different Member States. We explore how this obligation has been implemented in the UK and the Netherlands in our earlier article here.

Factoring compliance into user experience

The German ruling is not a binding precedent for the UK courts. However, since there is little UK case law on this matter and it relates to the same underlying EU directive, any UK court would likely find the German decision persuasive. In addition to the risk of court action, the Competition and Markets Authority (CMA) is empowered to enforce consumer protection law and could take the opportunity to sanction similar violations of consumer legislation by other companies.

The Dash judgement is a reminder that convenience or the player gaming experience cannot trump consumer law. Publishers and developers expanding play options as well as the in-game products available should review their product compliance with EU consumer protection law to make sure that convenience or style does not result in a payment method which is unlawful. Although the legislation is based on an EU Directive, the judgment shows that the different implementations of the Directive in Member States can lead to varying results. When rolling out products across Europe, companies should still be aware of local deviations.