Are people who purchase NFTs entitled to a refund if they decide they don’t like their digital photos? Some Europeans are beginning to make the case with a 25-year-old law.
Dissatisfied buyers claimed that their right to a refund was protected by a 1997 European Union law that required any person or business engaged in “distance selling” – that is, the buying and selling of a product not conducted in person – to allow customers a 14-day grace period to return the product for a refund. funds. But since digital goods are different, the law provides for a 14-day period to give them away if customers are notified in advance.
While interpretation of the law will inevitably play out in the courts, there are several important caveats to keep in mind, especially given that the law was written before digital goods and services became ubiquitous. Simply put, the law was written before the advent of the Internet, let alone digital assets like NFTs, so it is less applicable today.
As an example of it not applying to the current state of the NFT market, keep in mind that “this directive does not apply to contracts” that are “concluded with telecom operators through the use of public payphones.” What differentiates contracts entered into through the use of public telephones versus contracts through the blockchain? Nothing substantial other than the delivery mechanism, confirming that the intent of the law was to prevent consumers from being ripped off by sellers who were shipping physical goods that turned out to be different from what the consumer originally desired before seeing them in person.
advertisement
Stay safe in Web3. Learn more about Web3 Antivirus →
Essentially, applying the directive to NFTs will have serious consequences for patent and trademark law. Crucially, every NFT is, by definition, inherently unique, and any NFTs that are retrieved and discarded inevitably mean the destruction of intangible capital. In contrast to the 1997 EU directives, shipped products are largely homogeneous, so a buyer seeking a refund and return does not damage the product and prevent resale by the seller.
Furthermore, allowing refunds would defeat the very purpose of scarce portrait projects – potentially eliminating their value entirely. Consider the example of Bored Ape Yacht Club NFTs. BAYC’s highest value purchase was $3.4 million spent on #8817 – which was minted for approximately $1,000 in April 2021. Its rarity is partly a product of the “golden fur,” a trait held by less than 1% of BAYC NFTs on the market.
Of course, if buyers could simply ask for a refund in the event they don’t like the NFTs they randomly receive during the minting process, it’s safe to say that “1% NFTs” will become more popular, as buyers will simply keep seeking a refund until they get their hands on it. the NFTs they want. If you follow the logical consequences of this thinking, there will be no rare NFT cases anywhere in the market.
The truth is that the law around digital assets has not kept up with the technology, so there is naturally a temptation to rely on outdated and irrelevant regulatory guidelines, for better or worse. But if we keep pressing and companies innovate and serve consumers in good faith, we can converge to a new balance that generates value on all sides of the equation.
