German Federal Court of Justice (BGH) – UWG claim to cease in representative action does not Include refund for wrongfully withheld payments from Consumers

When a company wrongfully charges consumers minimal amounts, for example, based on invalid general terms and conditions (T&Cs), these amounts are rarely reclaimed by consumers despite the lack of legal grounds for keeping the money. It was disputed whether the claim to cease under the Unfair Competition Act (UWG), which can also be enforced by certain qualified associations, includes a refund claim concerning the withheld amounts. The German Federal Court of Justice (BGH) now addressed this question in the case of a payout fee for remaining balances on a wristband for cashless payment.

The plaintiff, the Federation of German Consumer Organizations, filed a lawsuit against a concert promoter for the removal (and consequential removal) by refunding a payout fee of €2.50, which was deducted from festival attendees when refunding the remaining balance of their wristbands for cashless payment, previously purchased at the festival.

Withholding of wrongfully paid fees maintains unlawful situation?

According to the plaintiff, withholding the payout fee was based on an invalid T&C clause, for which the plaintiff had already issued a cease and desist letter, and obtained a corresponding declaration from the concert promoter. The plaintiff argued that the payout did not constitute a service deserving remuneration by the defendant, but rather a non-remunerable fulfillment of a statutory obligation. By not refunding the payout fee, the defendant maintained an unlawful situation, which the consumer association was entitled to litigate on behalf of the consumers. The claim was derived from §§ 8 para. 1 sentence 1, para. 3 no. 3, 3a UWG in conjunction with § 307 para. 1 BGB, as well as §§ 8 para. 1 sentence 1, para. 3 no. 3, 5 para. 1 sentence 2 no. 2 UWG. The consumer protection association was of the opinion that they did not need to specify the amounts to be refunded or the entitled consumers to assert the claim.

Fundamental Question: How far does the claim to cease under § 8 Para. 1 Sentence 1 UWG extend?

The Rostock Regional Court dismissed the lawsuit, arguing that the plaintiff lacked the legal basis for the demanded payment claim. The Rostock Higher Regional Court confirmed this decision and dismissed the plaintiff's appeal, stating that the demanded refund claim did not concern the collective interests of consumers covered by the protective purpose of § 8 para. 1 sentence 1 UWG. The revision was permitted to clarify the fundamental question of whether consumer protection associations can assert refund claims on behalf of affected consumers via a claim to cease under § 8 para. 1 sentence 1 UWG.

System of collective legal protection under UWG precludes refund claim without fault

The BGH rejected this claim (Judgment of September 11, 2024 - I ZR 168/23). Although the contested T&C clause was invalid, as it did not constitute an independent service deserving remuneration but rather an existing contractual obligation, the plaintiff could not assert a refund claim for systematic reasons. Both the skimming-off profits claim in favor of the federal public budget and the consumer compensation claim under the UWG are fault-dependent. Consumer associations can assert consumers' claims for performance through a relief action. A further fault-independent claim for the refund of wrongfully withheld amounts owed to multiple consumers under § 8 para. 1 sentence 1 case 1 UWG would contradict this system of collective legal protection.

Profit Skimming Under § 10 UWG Removes Incentive for "Scattered Damages"

The OLG had used the legislative rationale for the revised UWG to justify this blocking effect now confirmed by the BGH. The legislative rationale cites the profit skimming claim under § 10 UWG to address damages in the de minimis range affecting many injured parties, which are not individually claimed due to a certain "lazyness threshold" of consumers (so-called "scattered damages"), to correct market failure ("unfair competition always pays off") (OLG Rostock, Judgment of November 15, 2023 - 2 U 15/21; BT-Drs. 15/1487, p. 22 f.). The legislature thus recognized the problem of scattered damages and considered profit skimming under § 10 UWG a sufficient remedy.

Conclusion: Practical Clarification Prevents Excessive Refund Efforts

The BGH's findings on the legal status quo are fairly practical and ensure a fair balance of interests. On the one hand, users of invalid T&Cs can potentially remit wrongfully retained amounts as a whole upon the plaintiff's appropriate request under § 10 UWG and offset their actual expenses since only profits are skimmed. On the other hand, competitive misconduct is not worthwhile due to the absence of profit, so the deterrent effect of § 10 UWG can benefit consumers. This spares companies the need to coordinate and make hundreds of individual payments.