Long-term contracts have historically been a horror for consumers. That’s enough of that. The German Bundestag has passed a law that makes long contract terms impossible. With one exception.
Long-term contracts will soon be a thing of the past. Because the Bundestag has passed a reform of new contractual rules for consumers and passed a corresponding law. The aim of the whole thing: to increase consumer protection with regard to long-term contracts. For cell phone providers, fitness studios, energy suppliers and even pay TV providers, among others , this results in changes to the subscriptions they offer. And that for the benefit of the customer.
TWO-YEAR CONTRACTS ARE ALLOWED IF …
One of the most important changes decided by the Bundestag: An automatic renewal of contract documents is excluded in the future. In the future, companies must always inform their customers if a contract is to be extended. In addition, follow-up contracts may not cost more than 25 percent. For example, if you use a contract that costs 20 euros per month, it may then cost a maximum of 25 euros per month.
In addition, the term may only be a maximum of one year in the future. Contracts with a maximum term of two years are still permitted, but only if a contract with a maximum term of one year is also offered in parallel. And this annual contract may only be a maximum of 25 percent more expensive on a monthly average than the two-year contract.
Contracts with a minimum term of two years were and are particularly popular with telecommunications companies, but also with gas and electricity suppliers. Customers should be bound to a company for as long as possible in order to be able to collect an often high basic fee for a long period of time. In the past, those who want to get out of a contract earlier usually had to pay high fines. Often, an early exit from an ongoing contract was not even possible.
It should also be noted that the Bundestag will shorten the notice period. Previously it was often three months, but in future only one month’s notice period will be permitted. If a contract is to be extended automatically, companies must inform their customers about this and explain which termination options exist. In the future, companies will also have to clearly indicate on invoices the point in time by which a timely termination must take place.
TERMINATIONS SHOULD ALSO BECOME EASIER
Speaking of termination : In the future, it will not only be the term of contracts that will be more consumer-friendly. The possibility of terminating a contract should also be simplified. Companies must give the customer service area on their website the option of being able to terminate contracts quickly and easily using a “termination button”. One click is then sufficient to cancel. Some companies already offer this today, but many require a phone call, so that trained hotline staff can persuade customers who are willing to terminate to change their minds and persuade them to extend their contract.
