German ecommerce businesses that offer products and services online must ensure their ordering and payment processes are legally compliant. This includes abiding by a range of legal requirements. In addition to terms and conditions, a legal notice, and a privacy policy, you’ll also need a cancellation policy, otherwise known as the right of withdrawal.

This article explains the right of withdrawal under Section 355 of the BGB (German Civil Code), the resulting obligations for online retailers in Germany, and the legal consequences of violations. We’ll also show you how Stripe can help you implement the right of withdrawal and comply with legal requirements.

What’s in this article?

• What is the right of withdrawal?
  
• What obligations do the right of withdrawal impose on online retailers?
  
• What are the legal implications of violating the right of withdrawal?
  
• How Stripe can help
  

What is the right of withdrawal?

According to Section 355 of the BGB and Section 356 of the BGB, consumers have the right to withdraw from a distance sales contract within 14 days, without having to state a reason. A distance sales contract is a contract between a company and a consumer that is concluded remotely, e.g., via the internet, email, or over the phone.

For services and digital content, the cancellation period (e.g., “cooling-off period”) starts as soon as the contract is concluded, while for physical goods it starts once the goods are received. If multiple items are delivered separately or as partial deliveries, the cooling-off period starts when the final delivery is received. In the case of contracts pertaining to regular deliveries of goods, the cooling-off period begins with the first delivery.

If a consumer cancels their order within the cooling-off period, online retailers are obligated to refund them the purchase price in full. However, the consumer is required to explicitly declare their intention to cancel, for example by email or a special cancellation form. Refusing to accept an item or returning a product without comment is not sufficient. Immediately after canceling, customers must return any items received to the online retailer.

The right of withdrawal does not apply to all contracts. Exemptions exist, for example, for personalized products, perishable goods, or goods that are past their use-by date. The same applies to sealed products if the seal has been broken after delivery and the product cannot be returned for health or hygiene reasons. Section 312g.2 of the BGB provides an overview of all goods and services excluded from the right of withdrawal.

What obligations does the right of withdrawal impose on online retailers?

If you run an online store, not only are you required to grant your customers the right of withdrawal, you also have to comply with the following requirements:

Cancellation policy

Online retailers must inform consumers of their right of withdrawal both before and after the conclusion of a contract. You are required to inform consumers, in particular, of the length of the cooling-off period, conditions for cancellations, the returns process, and the implications of canceling a purchase. You must either place your cancellation policy in an area of your website that is clearly visible, or present it during the checkout process. Either way, it must be quick and easy for consumers to find.

It’s a good idea to use the cancellation policy template provided by law. You should use this text without making significant changes, as incorrect information can have legal consequences. If your contract contains a financial service, you cannot use the sample policy verbatim. Instead, you must compile your own cancellation policy that fulfills the specific legal requirements for financial products.

Cancellation button

Starting June 19, 2026, businesses offering B2C contracts online must integrate a digital cancellation function into their website. EU Directive 2023/2673 mandates the integration of a cancellation button that makes it just as easy to cancel a contract as it is to conclude one. This button must be clearly labeled and prominently located. Clicking the cancellation button takes consumers to a confirmation page where they can enter the details of their contract and finalize their cancellation. Online retailers must then confirm receipt of the cancellation request via email.

Refund of the purchase price

When consumers cancel a purchase contract, online retailers are obligated to refund them the full purchase price, including shipping costs. You must process this refund within 14 days of receipt of the cancellation request. You do, however, have a right to withhold funds. Specifically, you are only required to pay out the refund once the goods have been returned, or once the consumer demonstrates that they have returned the goods.

The money must be refunded via the same payment method used to place the order—unless the consumer agrees to a different method. You cannot charge any additional fees for refunds. Online retailers can also offer to pick up the goods being returned.

Return shipping costs

Generally speaking, consumers are liable for any costs involved in returning their goods, unless the retailer expressly agrees to cover the costs. In addition, online retailers are required to provide consumers with sufficient information on the return costs prior to purchase. This applies all the more so to returns that have to be sent with delivery companies, for example, rather than using regular mail services.

Risks involved in returns

When a customer cancels a purchase, the online retailer bears the risk of the returned item becoming lost or damaged during transit. However, consumers are required to pack the goods properly, as they are liable for any damages caused by improper handling during return shipping. That said, they are not required to return the goods in their original packaging in order to enforce the right of withdrawal. If the items are soiled or damaged when they reach the online retailer, then the retailer might be able to claim compensation.

What are the legal implications of violating the right of withdrawal?

Proper handling of the right of withdrawal is key to legal compliance for online retailers. Implementing the statutory requirements incorrectly or insufficiently can not only lead to financial penalties, but also have serious legal consequences.

Extended cooling-off period

According to the BGB, consumers have 14 days to withdraw from a distance sales contract. While online retailers can opt to extend this cooling-off period, they are not permitted to reduce it. If a cancellation policy does not comply with the statutory requirements, or if there is no cancellation policy at all, the cooling-off period is automatically extended by 12 months. When this happens, consumers have a full year to cancel their contract and initiate a return.

Warnings and fines

An incorrect cancellation policy or failure to comply with cancellation provisions can result in warnings from competitors and consumer rights organizations. These warnings usually come with a demand to cease and desist, and to cover any legal costs that have been incurred. In serious cases, repeated warnings might be issued, each accompanied by serious financial burdens. Online retailers should also expect to incur fines if they fail to properly observe consumer rights.

Claims for damages

If a faulty cancellation process results in a delayed refund, affected consumers can claim damages. The same applies if online retailers fail to process a cancellation correctly. The consequences can include lengthy legal disputes and high costs for the business.

Reversal of contracts

If online retailers violate the provisions of the right of withdrawal, they might be required to reverse contracts that were originally considered legally binding. The implications of this are both legal and financial, as reversals in the form of refunds, and the costs associated with them, involve time and money.

Reputational damage

A key aspect of complying with right of withdrawal regulations is customer trust. If online retailers fail to properly inform their customers of their rights, or if problems occur when processing a cancellation, the loss of reputation can be enormous. In an age of online reviews and social media, negative experiences spread fast and can scare off potential buyers. This means the negative impact on revenue and brand perception can be far greater than the direct legal consequences.

How Stripe can help

When your customers enforce their right of withdrawal according to Section 355 of the BGB, Stripe Payments makes it quick and easy to initiate the refund process. With Stripe, you can refund undisputed payments in one of two ways: directly from the payments overview page in the Dashboard or using the Stripe API.

By default, refunds are issued for the full invoice amount. You can freely adjust the amount if you need to issue a partial refund. This flexibility gives you an efficient, individualized cancellation process. Stripe remits funds to the customer’s account within 5 to 10 days. You can try out refunds in test mode first to make sure the process runs smoothly and without errors.

By integrating Payments, you can make the entire cancellation process not only legally compliant, but customer-friendly too. Refunds that are easy to manage and quick to process mean your customers come away with positive experiences of your business, even when they cancel a purchase.