Codes of conduct in Germany
(By Verbraucher - Zentrale Hamburg e.V.)

Codes of Conduct, Transparency
and Self Regulation:
Towards a Double Way of Protection of European Con-sumers’ legislation and Self-Regulation
Introduction

During the change of the millennium the economy’s organisation is going through pervasive changes. More and more companies act on markets outside their home countries (”globalisation”). Instead of trade with industrially created products the offer of services have become the centre of economical interest (”Service Society”). And finally, due to the rapid development of computer and network technology ”information” has become not only a matter of numerous public discussions (for instance about freedom of information or protection of personal data) but has also been discovered as an economical source of extraordinary importance (”Information Society”).
However, those changes, of course, are accompanied by a remarkable uncertainty of all who are concerned and this represents a considerable obstacle to the further economic development. In Germany this becomes most obvious in the development of the so-called electronic market, which is of extraordinary importance to the market of financial services (see paper on ”Means of payment and financial services at distance”) but in spite of highly-developed technology still remains in its ”start-up” phase. On the one hand, the use of services offered via Internet are still consid-ered being tendential dangerous by a great number of number of consum-ers. Correspondingly the consumer behaviour of the population as a whole in this field is comparatively reluctant. On the other hand, companies are also considerably unsure how conflicts that may arise can be solved.
Those uncertainties might be eliminated in a rather traditional way by the legislator. By enacting statutes, which would provide increased transpar-ency in favour of the customers on the one hand and legal certainty in favour of the companies on the other hand the development especially of the electronic market might be accelerated substantially. However, it is widely accepted that a formal legislation done by the state can hardly satisfy the needs of economic processes, which are rapidly and constantly changing their structures. Because of these reasons some suggest/ it has been suggested that – in addition to the classical regulation done by the state – self-regulation mechanisms be drawn on. And this idea can also be found in the European Directive on Electronic Commerce (Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000). Referring to Article 10 of this directive providers in the member-states shall not only be obliged to arrange their offers transparent in accordance to certain criteria. Additionally it shall be provided, that customers are comprehensively informed about any code of conduct the provider complies with. And furthermore, according to the Article 16 of that same directive, consumer associations as well as companies shall be expressively encouraged to work out codes of conduct.
1. Incorporation of European Normatives in the German Legislation
The named European Normatives concerning the electronic market, which will serve as an example to discuss the subject ”Codes of conduct, trans-parency and self-regulation” in the following, have been implemented mainly in § 312e of the German Civil Code (Bürgerliches Gesetzbuch [BGB]). Thereby it is stipulated, how providers who make use of ”tele- or mediaservices for the purpose of concluding a contract about the delivery of goods or the supply of services (electronic commerce contract)” have to arrange their offers: According to § 312 sec. 1 No. 1 the customer has to be provided with ”appropriate, effective and accessible technical means allowing the customer to identify and correct input errors, prior to sending his order”. According to No. 3 of the same stipulation providers have to ”acknowledge the receipt of his [the customer’s] order by electronic means without delay”. No. 4 determines that customers must be enabled, ”to retrieve and save the conditions of the contract including general trade terms incorporated in the contract in reproducible form”. Finally, according to Nr. 2, a customer must be supplied with further information specified in the so-called ”Verordnung über Informationspflichten nach Bürgerlichem Recht” (BGB-InfoV) ”clearly and comprehensibly in good times before the sending of his order”. With respect to § 3 BGB-InfoV this information must contain: 1. information on ”the single technical steps that lead to the concluding of a contract” 2. information on ”whether the contract text is stored by the entrepreneur after the contract is concluded and whether it is accessible for the customer” 3. information on ”how the customer can identify and correct input errors by in accordance to § 312e sec. 1 S. 1 no. 1 provided technical means prior to the order” 4. information on ”lan-guages available for the concluding of the contract” and 5. Information on ”any pertinent code of conduct the provider complies with, aswell as a possibility of electronic access to these codes”.
2. Main Problems
In Germany the possibility of self-regulation by codes of conduct named in BGB-InfoV is hardly of any importance. As there are such codes they have primarily been worked out by provider associations and are used as a kind of commercial or quality seal. Unfair competition for the purpose of an intentional violation against the duty to inform customers on such codes is therefore hardly imaginable. Neither is it likely, that by such codes provid-ers comply with rules which in an adequate way satisfy principal conflicts of interests in their relations to the customer. The named other stipula-tions in § 312e BGB, which are meant to provide transparency in elec-tronic commerce haven’t been of much help, either. In some cases they even seem to have a counterproductive effect. This seems to have its cause in the provision’s rather vague wording and the fact that essential questions remain unsolved. Essential for that purpose is first and foremost the question under which circumstances a contract that has been initiated by the means of electronic communication is considered legally valid. In this context, the tendency of many providers to interpret plain ”hyperlink-clicking” or ”number-dialling” as a comprehensive agreement is of crucial importance. In fact, this expanding attitude apparently raised a certain fear of closing contracts unintentionally due to the lack of experience and/or technical knowledge among the population and can therefore be named as a main reason for many consumers’ reluctance to enter the electronic market at all. In Germany the means of payment by so-called value added network services are the most prominent example concerning this problem (see again paper on ”Means of payment and financial serv-ices at distance”). Taking this into consideration some of the valuations suggested in § 312e BGB seem highly questionable. Is it – as implied by § 3 No. 1 BGB-InfoV (Art. 10 of the directive on electronic commerce) - exclusively up to providers to determine ”steps that lead to the concluding of a contract”. And is lack of providing information on those steps nothing but a matter of non-transparent and therefore unfair competition without legal consequences concerning the contractual relation to the customer (so apparently Heinrichs in Palandt, BGB § 312e Rn 11)? Such valuations obviously object to a legal principle, which is acknowledged in all evident legal systems: a legally valid contract does not come into consideration as long as transparency, which gives the possibility to the contracting parties to gauge an offer and decide against or in favour of it. In other words: legally, nobody has to be afraid to be obliged to his detriment secretly – not even on the electronic market. And it looks like the legislator’s failure to clarify this is currently one of the main practical problems. However, practical problems with the regulation of the electronic market in § 312e BGB also occurred in such cases in which the concluding of a contract was in the customer’s best interest. The Munich Oberlandesgericht (15.11.02 - 19 W 2631/02) for instance had to decide whether an offer released on the Internet is binding even if the given price is far below the usual level and held - apparently rather instinctively than referring to an evident rule - that the offer was just too good to rely on its validity. In another case a customer received a confirming e-mail immediately after making an order via the Internet, claimed performance on that basis, but lost the case as the court was of the opinion that he could not rely on a confirmation which was sent due to the obligation in § 312e No. 3 only (LG Gießen – 04.06.03 - 1 S 413/02).
3. Proposal on changes in the legislation
Those to a considerable part simply confusing provisions in § 312e BGB (see also Heinrichs in Palandt, BGB § 312e Rn 7) seem to indicate that the legislator himself does not and most likely cannot overlook the branch he wants to provide with an increased transparency. Taking this into consid-eration the question arises, whether the means of alternative regulation mechanisms, which might satisfy changes in society and economy that occurred especially on the electronic market more effective, are exhausted by being marginally mentioned in § 3 No. 5 BGB-InfoV only. To compen-sate the weak points of pure self-regulation, in Germany the term Regu-lierte Selbstregulierung ([”regulated self-regulation”] Hoffmann-Riem, Multimediapolitik vor neuen Herausforderungen, in: Rundfunk und Fernse-hen 1995, S. 125) has been introduced into the discussion. In the follow-ing it will be shown, which different models of ”regulated self-regulation” have been worked out so far and to what extent it makes sense to imple-ment such mechanisms in favour of consumer protection on the electronic market.
a) Models of regulated self-regulation
Regulated self-regulation is plainly spoken a kind of self-regulation which is adjusted to the legal system of a state or takes place on the basis of law enacted by the state. As a result regulated self-regulation, in compari-son to pure self-regulation, has an increased degree of liability, but ideally does not require imperative intervention by the state. For the purpose of implementing such mechanisms, principally three models can be distin-guished. Firstly, it is possible to oblige providers to work out or comply with codes of conduct. Such codes of conduct would have to fulfil certain criteria given by the state and be registered or certified by a regulating institution. This model, which is, for instance, already put into practice in Australia, can be named ”norm-centred” as the registration of the code is the core of the regulation (see: Schulz/Held Regulierte Selbstregulierung als Form des modernen Regierens, 2002). Secondly, the regulating or-ganisation that makes sure regulation goals of the state are being fol-lowed might become the cardinal point of the regulation. Similar to the model mentioned before, this model offers the possibility to register or certificate the regulating organisations in order to raise or provide a certain regulation standard (”organisation-centred model”). Within the framework of the ”supervision model”, finally, imperative intervention by the state shall be prevented to begin with by offering consulting to com-panies with the aim to inform and show how conflicts with public interests can be avoided. This is a common practice in the work of data protection agencies already (”Auditing”).
b) Implementation of regulated self-regulation
When implementing self-regulating mechanisms, it is of extraordinary importance to determine the goal of the regulation. For that purpose, it is not enough to refer to consumer protection in general. In fact, it has to be investigated attentively, whether it is necessary to establish rules or control of existing rules is sufficient. The ”supervision model”, for in-stance, can work efficiently only if existing rules already have been proved to be good in the past and the regulation goal is simply to make sure they are generally followed. This, for example, can be assumed with regard to legal stipulations, that oblige companies to inform consumers about their right to withdraw a contract under certain circumstances. However, in many cases there are no such generally accepted rules or the economical development has risen the need to change existing rules in favour of an increased degree of consumer protection. Taking a look at the electronic market in Germany – as mentioned above – especially rules about the concluding of a contract are missing. In those cases regulated self-regulation would have to substitute legislation by the state. This is possi-ble only within the framework of the ”norm-centred” model. Nevertheless, it is necessary to propose a legal basis for such alternative regulation. This is definitely not easy and preconditions immense preparatory work. But it offers the possibility to involve consumer associations as certification agency directly in the regulation. In comparison to the current practice, which is vastly affected by the lack of communication in between compa-nies and those associations, this would mean a great progress.