German courts have repeatedly found unilateral price increases or service changes in B2C subscription contracts to be unlawful

Case 1: Vague clauses are typically unenforceable

On 30 October 2024, the Berlin Court of Appeal (Case No. 23 MK 1/23) invalidated the price adjustment and service modification clauses of a popular gaming subscription service.

The clauses stated: 

“We are entitled to change the subscription price to cover costs, ensure service viability, and respond to market changes. You will be notified at least 60 days before a price increase, with an option to cancel. 

The games included in this subscription, the associated online features and other features are subject to change without notice. [...]"

The court found that the price adjustment clause was contrary to the principles of good faith and transparency. Consumers were not in a position to fully understand the circumstances in which the service provider would exercise these rights. The court also ruled that a price adjustment clause must provide for a reciprocal obligation on the part of the service provider to reduce costs in the event that the service provider benefits from cost reductions. In contrast to that, the clause gave the service provider broad unilateral power to increase prices, which the court held to unfairly discriminate against consumers.

With regard to the service modification clause, the Court held that it allowed for unlimited changes without any restrictions or justification, which prevented consumers from anticipating changes and making informed decisions. Due to lack of transparency and fairness, the court concluded that these clauses were unenforceable under German law.

Case 2: Even more detailed terms can be found to be intransparent 

On 15 January 2025, the Düsseldorf Regional Court (Case No. 12 O 293/22) ruled that a unilateral price increase by a major online service provider for its premium subscription was unlawful.

The relevant clause stated:

“We are entitled to adjust the membership fee at our reasonable discretion and based on relevant justified and objective criteria. […] 

An increase or decrease in the membership fee may occur to pass on cost increases and/or savings that arise from external circumstances beyond our control, affecting the specific costs of the service in your country, such as changes in law, government orders, general price changes for necessary hardware and/or software, production and licensing, other general costs like external service providers, wage increases, and/or changes in taxes and fees, and/or general and significant cost changes due to inflation or deflation. A change in the membership fee will only occur to the extent that our own costs and/or taxes and/or expenses increase or decrease overall.

Thus, we will only pass on cost increases to you if and to the extent that they are not offset by other cost reductions. We will not make changes to the membership fee that affect the contractual balance between the service and the membership fee you pay for it.”

Although the clause is significantly more balanced and detailed, the court found it to be intransparent and hence unenforceable against consumers, stating that the service provider had failed to provide clear and understandable criteria for consumers. Inter alia, the criterion of "general and significant changes in costs due to inflation" was found to be too vague, as the criterion of "inflation", unlike fixed indices, does not allow consumers to anticipate or verify price changes. In addition, the court found that since the provider could terminate the contract on 14 days' notice, there was no need for a long-term calculation with price adjustment clauses. Therefore, the court concluded that the clause created a disproportionate contractual imbalance to the detriment of the consumer.

The two recent rulings once again underline that contractual terms which grant excessive discretion to service providers at the expense of consumers are unlikely to be upheld in German courts. As a result, statutory provisions will apply in place of the invalid contractual terms. In relation to both price increases and service changes, this means that the provider will need to obtain the consumer’s consent in order to amend an existing subscription contract. Obtaining consent from a large customer base is obviously extremely challenging. 

What should businesses do in response to these rulings?

Businesses are well advised to review and align consumer subscription contracts to the criteria established by German case law in order to avoid the risk of cease-and-desist claims or injunctions by consumer protection associations or competitors and (potentially) fines. 

Given the high thresholds set by German courts, organisations should furthermore carefully review the actual applicability of the contractual provisions in relation to each proposed price increase or major service amendment, focussing on the reasons and impact of the same, and have evidentiary documentation ready in the event the increase or change were challenged.