Price increase clauses for Netflix and Spotify invalid
Price increases for Netflix and Spotify? Annoying. After all, it was done without the customers' consent. However, this is only permitted for current contracts if they follow fair and transparent rules. Which a court denied. The subsequent instance has now also rejected the appeals.
The Berlin Regional Court (LG) ruled twice against Netflix and Spotify following complaints by the Federation of German Consumer Organizations (VZBV). (Ref.: 52 O 157/21 and Ref.: 23 U 112/22). In recent years, the streaming services had significantly increased prices for subscriptions without their customers having to give their consent. The Berlin Court of Appeal has now declared this business practice to be unlawful in two appeal judgments against Spotify and Netflix, and the corresponding price increase clauses at Netflix and Spotify to be invalid(Ref.: 23U 15/22 and 52 O 157/21 and Ref.: 23 U 112/22 and 52 O 296/21).
According to the court, the two providers sued may not unilaterally adjust their prices without the customers' consent. The Court of Appeal stated that Netflix and Spotify could easily obtain their users' consent to a price increase.
First a refund, then termination?
Netflix granted itself the right via a contractual clause to change its subscription prices "from time to time" and "at its reasonable discretion" "to reflect the impact of changes in the overall costs associated with our service".
Spotify had reserved the right in the Terms of Service to increase subscription fees and other prices to "offset the increased total cost" of providing the streaming services. The total costs included, for example, production and license costs, personnel, administration and financing costs as well as taxes, fees and other charges. The clause did not provide for a price reduction as a result of lower costs.
Both rulings are not yet legally binding, as an appeal to the Federal Court of Justice is still possible. Stiftung Warentest assumes that those affected will have to actively claim a refund of overpaid fees, as Netflix and Spotify themselves do not currently provide for refunds, although refunds will only be made once the judgment is final. In addition, the companies are then entitled to cancel subscribers with old prices. In this case, a new subscription can only be taken out at the current conditions.
- Consumers who are currently subscribed to Netflix or Spotify should seek advice from their local consumer centers regarding the recent legal judgments that invalidated the price increase clauses.
- The Berlin Court of Appeal deemed it unlawful for Netflix and Spotify to unilaterally increase prices without obtaining consent from their customers, as this practice violates fair and transparent rules.
- Mobile radio users should be cautious when signing up for mobile phone tariffs, as some providers may attempt to include rip-off clauses that allow for unexpected price increases.
- Stiftung Warentest recommends using trusted consumer protection apps to monitor mobile phone tariffs and ensure that providers are following legal guidelines regarding price increases.
- In response to the recent judgments, legal experts are advising consumers to review their contracts with Netflix and Spotify to identify any price increase clauses and consider seeking legal advice on how to challenge their validity.
Source: www.ntv.de
