Most important points

• A withdrawal policy is the prescribed information to consumers about their 14-day right of withdrawal for certain contracts (usually online purchases or door-to-door sales).

• It must provide clear and comprehensible information about the deadline, conditions and consequences of withdrawal, e.g. that consumers can withdraw from the contract within 14 days without giving reasons.

• The information must be provided in text form (e.g. email or paper) before the contract is concluded (or at the latest immediately afterwards); this is often done in the GTC or via a separate notice on the website.

• If the cancellation policy is missing or incorrect, the right of withdrawal is extended considerably (by up to 12 months) – consumers can therefore withdraw from the contract long after the purchase.

• In the event of revocation, services received by both parties must be returned: the customer returns the goods and the seller refunds the purchase price.

• Not every contract has a right of withdrawal: exceptions exist, for example, for sealed goods from health protection, perishable goods or customized products.

• It is important for entrepreneurs (online store operators) to have correct withdrawal instructions in order to avoid warnings and extended withdrawal periods.

Introduction

The right of withdrawal is a central instrument of consumer protection in German and European contract law. Whenever a consumer concludes a contract outside of business premises or online (so-called distance contracts or doorstep selling), they are entitled to a right of withdrawal in most cases. To ensure that consumers are aware of this right and are able to apply it, the law obliges traders to provide them with proper information. The withdrawal policy informs the consumer of their right to withdraw from the contract within a certain period without giving reasons. For start-ups and online retailers, it is essential that the legal requirements are strictly adhered to, as mistakes can be costly.

Content and form of the withdrawal policy

Cancellation instructions must be clear, comprehensible and comprehensive. Statutory model texts specify what information must be included. Typical components are

• Withdrawal period: Generally 14 days from receipt of the goods (or conclusion of the contract for services).

• Withdrawal form: Entrepreneurs must provide a model withdrawal form that the consumer can (but does not have to) use.

• Exercise of revocation: Indication that the revocation should be made in text form (e.g. by e-mail or letter) – for example by a clear declaration by the consumer that they wish to revoke the contract.

• Consequences of withdrawal: Declaration that in the event of withdrawal, payments already made must be refunded and the consumer must return the goods. This also states who bears the costs of returning the goods (in many transactions the consumer, if the trader has agreed to this and the goods do not exceed a certain value).

• Exclusion or premature expiry of the right of withdrawal: Information on the cases in which there is no right of withdrawal (e.g. download of digital content after the start of the download with the consumer’s consent, individually manufactured goods, sealed hygiene articles with a broken seal, etc.).

The information must be provided to the consumer in text form at the latest when the contract is concluded. In the case of online stores, the text is usually linked in the terms and conditions or on a separate page and also sent by email in the order confirmation. It is important that the information is provided before the contract is concluded or at the latest upon delivery so that the period begins to run correctly.

Legal consequences of missing or incorrect instructions

If an entrepreneur does not provide any or incorrect withdrawal instructions, this has considerable consequences. In this case, the 14-day withdrawal period does not start to run. The consumer’s right of withdrawal then only expires 12 months and 14 days after the actual start of the period. In practice, this means that customers can still cancel their purchase after up to a year. This is of course a risk for companies: the consumer could use the goods for a long time and then return them.

In addition, missing or incorrect withdrawal instructions constitute a breach of consumer protection regulations. This can result in warnings from competitors or consumer associations, as it is considered unfair competitive behavior. Such warnings are annoying and expensive for young companies. This is why start-ups in e-commerce should pay particular attention to implementing the prescribed content exactly. It is often advisable to use the legal model for the withdrawal policy provided in the Introductory Act to the German Civil Code (EGBGB) and adapt it to your own business model.

Exceptions to the right of withdrawal

Consumers cannot withdraw in all cases. The exceptions must also be listed in the instructions if they are relevant. Typical examples:

• Customized goods: If a startup has personalized a product (e.g. engraved with customer names), there is no right of withdrawal as the goods would be unsaleable for others.

• Sealed goods with health or hygiene protection: For example, cosmetics or medical products that should not be taken back once the seal has been broken.

• Perishable goods: Food with a short expiration date, for example.

• Digital content: In this case, the right of withdrawal expires if the consumer has expressly agreed that the download/streaming will begin immediately and thereby loses their right of withdrawal. However, the trader must inform the consumer of this in advance and obtain their consent.

A startup should check whether such exceptions apply to its own offer and then indicate this in the instructions. This way, the customer knows from the outset when they have no right of withdrawal.

Practical implementation for start-ups

Founders who offer an online store or subscription services in particular should give high priority to the withdrawal policy. It is best to integrate the instructions clearly visible in the checkout process. A note such as “You have a fourteen-day right of withdrawal. You can find our withdrawal policy here.” including a link, before the purchase is finalized. The text should also be included in the confirmation email after the purchase in order to meet the requirements for text form.

It is also advisable to provide the model withdrawal form, even if consumers rarely use it. It increases legal certainty. This form can be offered for download as a PDF or embedded in the email, for example.

Startups should also define internal processes for dealing with incoming revocation declarations: Fast processing, reversal of payment and organization of the return of goods ensure customer satisfaction and avoid additional legal disputes.

Conclusion

The withdrawal policy may sound like a formality, but it is an important pillar of consumer protection. At the same time, it is a stumbling block for companies if it is neglected. New online retailers in particular need to be aware of this: Without correct instructions, there is a risk of warnings and long withdrawal periods. A clearly formulated, legally compliant withdrawal policy ensures that customers know their rights – and that your start-up is legally on the safe side.