Internet Law

Negative pay as you go balances ruled unfair

Judges in Germany have ruled that mobile phone companies are no longer permitted to require customers to immediately repay negative pay as you go balances.

The case was brought on behalf of consumers by the consumer advice centre of North Rhine Westphalia against a mobile phone operator. The operator had offered customers pay as you go services and had advertised the benefits of the services as including the ability to control balances.

As with all pay as you go services, consumers loaded their call time before using their phones. The balances were then reduced depending on usage.

Standard terms and conditions

The standard terms and conditions, which were printed in small print, contained a clause requiring consumers to immediately repay any negative balances. Failure to do so entitled the phone operator to block the mobile phone.

The Regional Court of Frankfurt am Main ruled in the consumer advice centre’s favour (Az. 2-24 O 231/12).

Unfair terms

The court held that clauses requiring the immediate repayment of negative pay as you go balances placed consumers at an unreasonable disadvantage within the meaning of § 307 sub-paragraph 1 of the German Civil Code. It reasoned that consumers who use pay as you go services do not expect their credit to fall into minus figures placing them in debt. According to the court, such a concept is contrary to the purpose of pay as you go mobile phones.

In February 2013, the Regional Court of Munich reached a similar decision in a separate case (Az. 12 O 16908/12).

Negative balance clauses still legal

As both decisions are not yet legally binding, it is advisable for consumers to continue to exercise care when using and purchasing pay as you go mobile phones. The terms and conditions should be read carefully to make sure they do not contain negative balance clauses. If you experience trouble, contact your local consumer advice centre or a lawyer.

Christian Solmecke is a partner at the law firm WILDE BEUGER SOLMECKE. He is the author of numerous legal publications in the area of internet and IT law. He is also an associate lecturer for social media law at the Cologne University of Applied Sciences.

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