Should people who purchase nonfungible tokens (NFT) be entitled to refunds if they decide they don’t like their digital pictures? Some Europeans are beginning to make that case under a 25-year-old law.
Unhappy buyers have claimed that their right to a refund is protected by a 1997 European Union law that requires any person or business engaged in “distance selling” — that is, buying and selling a product that is not done in person — to allow customers a 14-day grace period to return the product for a refund. But since digital goods are different, the law makes provision for the 14-day period to be waived if customers are made aware in advance.
While the interpretation of the law is going to inevitably play out in the courts, there are several important caveats to take into account, particularly given that the law was written before the ubiquity of digital goods and services. Simply put, the law was written before the emergence of the internet, let alone digital assets like NFTs, so it is much less applicable today.
I decided to e-mail @yugalabs and ask them for a refund on my Otherdeed NFT, which I believe is my statutory right under UK law.
And of course, I asked ChatGPT to write the e-mail for me https://t.co/7jIYLZyZaK pic.twitter.com/DJfYQqT3xk
— Paul | Top Dog Studios (@darkp0rt) January 26, 2023
Just as an example that it is not applicable to the current state of the NFT market, consider that “this Directive shall not apply to contracts” that are “concluded with telecommunications operators through the use of public payphones.” What differentiates contracts that are concluded through the use of public telephones versus through the blockchain? Nothing substantive other than the delivery mechanism, underscoring that the intent of the law was to prevent consumers from getting ripped off by sellers who were shipping physical goods that turned out to be different from what the consumer originally desired before seeing it in person.
Fundamentally, applying the directive to NFTs…