BGH: Telecommunications providers may not extend contracts using tricks

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The Federal Court of Justice (BGH) has issued an important ruling on consumer protection in telecommunications contracts. It has clarified that providers of mobile phone and internet services, for example, may not bind consumers to contracts with a term of more than 24 months by premature contract extensions. Even if the customer relationship is continued, contract terms of more than two years in total are not permissible in the first instance.

Early renewal in exchange for a bonus

The case concerns a legal dispute between the Berlin-based telecommunications provider Primacall and the North Rhine-Westphalia (NRW) consumer advice center. Shortly after customers signed their contracts, the company persuaded them to extend their contracts early in exchange for a bonus of €20. The service provider added an additional 24 months to the original contract term. This meant that customers were bound for significantly longer than two years, in some cases even 48 months.

In its ruling of July 10 (Ref.: III ZR 61/24), which has now been made public but not yet published, the BGH ruled that this practice is inadmissible. According to the court, the maximum contract term of 24 months always applies from the point in time at which the customer agrees to the extension. It is not permitted to add the new term to the remaining term of the old contract if this results in a total term of more than 24 months.

"Initial term" not decisive

The consumer advice center had initially warned Primacall without success and demanded that it cease and desist. The subsequent lawsuit filed before the Berlin Court of Appeal was then successful. The court affirmed that the provider's approach violated Section 309(9) of the German Civil Code (BGB), according to which no commitment of more than 24 months may be entered into.

According to the Berlin judges, it is irrelevant whether a contract is concluded for the first time or an existing contract is extended. This is because competition must be maintained in particular by the maximum commitment period, so that consumers are available to the market as consumers again at least every two years. This would be circumvented by a commitment that is added to the current contract term. There would also be a risk that a virtually unlimited contract term could otherwise be achieved.

The defendant, on the other hand, cited Section 56 of the Telecommunications Act (TKG). This states that the "initial term" of a contract between a consumer and a provider of publicly available telecommunications services may not exceed 24 months. According to the Court of Appeal, this wording only indicates that a distinction must be made between actively concluded contracts and tacit extensions of contracts that have not been terminated. However, the dispute does not concern such tacit continuations.

Against clever contract extensions

The Federal Court of Justice has now rejected Primacall's appeal. The ruling of the Kammergericht is therefore final. The TKG is intended to protect consumers from overly long commitments and excessive costs. The Federal Court of Justice's ruling now prevents providers from keeping customers in contracts for years by cleverly wording clauses on contract extensions. The Hanseatic Higher Regional Court had previously ruled that the minimum contract term for fiber optic contracts may not exceed two years. This applies to the conclusion of the contract, not to the connection.

Wolfgang Schuldzinski, chairman of the North Rhine-Westphalia Consumer Advice Center, sees the BGH ruling as an "important signal for greater consumer protection in the telecommunications market." Affected Primacall customers can terminate contracts by the 15th of the month to the end of the month. Lawyer Matthias Böse, who represented the plaintiffs, believes that "millions of contracts can now be terminated at very short notice." This also applies to pay TV, for example. Many consumers will now be able to "once again freely choose their provider on the market." However, a maximum commitment of 24 months is sufficient for companies to amortize investments such as subsidized smartphones or routers.

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