Money-back guarantee
is a real
guarantee.
Money-back guarantee
is a real
guarantee.
by
A guarantee is a commitment by the business that goes beyond a simple warranty. But when does a guarantee exist in the legal sense? Is a satisfaction guarantee considered such a guarantee? The European Court of Justice provides answers.
Money-back guarantee
LACD sells sports and fitness products under the LACD trademark through retail and online retailers. At least until 2013, it affixedhang tags to its T-shirts with the following text (hereinafter: LACD declaration):
LACD Guarantee
Every LACD product comes with our own lifetime guarantee. If you are not completely satisfied with one of our products, please return it to the retailer where you purchased it. You can also return it directly to “LACD,” but please be sure to let us know where and when you purchased it.
The competitor BB-Sport contended that the information on this hang tag did not meet the legal requirements for a warranty statement and asserted claims for injunctive relief.
The case eventually reached the Federal Court of Justice. The court had doubts as to whether the lack of “consumer satisfaction with the purchased goods” constituted a “requirement other than freedom from defects” and thus a guarantee in the legal sense. The Federal Court of Justice referred the case to the ECJ.
ECJ on the money-back guarantee
The Luxembourg judges ruled with Judgment of 28.09.2023 – Ref. C-133/22 that a guarantee of satisfaction is also a guarantee in the legal sense.
European law defines a commercial guarantee as any obligation of the trader or a manufacturer (guarantor) towards the consumer, in addition to the statutory warranty, to refund the purchase price or to replace or repair the goods or provide services for them if they do not have the characteristics or do not meet the requirements other than freedom from defects that are described in the guarantee statement or the relevant advertising as available at or before the conclusion of the contract.
This would include any obligation of the guarantor towards the consumer concerned “in addition to the statutory warranty”. This broad scope of application is not affected by the fact that the customer’s satisfaction cannot be determined objectively. In this case, the mere assertion of the consumer must be sufficient.
Conclusion
Companies must exercise caution when using the term “guarantee.” According to the ECJ, such a term would generally constitute a guarantee in the legal sense. This would mean that a guarantee statement must be issued that meets the legal requirements. Failure to meet these requirements could result in cease and desist letters forviolating competition law.
We’d be happy to
advise you on
Competition law!
