Should Bored Ape buyers be legally entitled to refunds?

Do nonfungible token (NFT) buyers have the right to a refund if they decide they don’t like the digital image? Some Europeans are starting to make their case under the 25-year-old law.

Unsatisfied buyers claim that their right to a refund is protected by a 1997 European Union law that requires people or businesses involved in “distance selling” – that is, buying and selling products that are not done in person – to allow customers a 14-day grace period to return the product for a refund. But because digital goods are different, the law makes provision for the 14-day period to be waived if the customer has known beforehand.

While the interpretation of the law will certainly be up for grabs in the courts, there are some important caveats to keep in mind, especially if the law was written before the ubiquity of digital goods and services. Simply put, the law was written before the advent of the internet, let alone digital assets like NFTs, so it doesn’t apply today.

As an example that does not apply 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 telephones.” What is the difference between a contract concluded through the use of a public telephone and through the blockchain? There is nothing substantive except for the delivery mechanism, which confirms that the intent of the law is to prevent consumers from being ripped off by sellers who deliver physical goods that are different from what the consumer wants before seeing them in person.

In essence, applying the directive to NFTs would have serious consequences for patent and trademark law. Importantly, each NFT is, by definition, unique, and NFTs that are returned and disposed of will inevitably destroy intangible capital. In contrast to the 1997 EU directive, the products delivered are generally homogeneous, so the buyer requesting a refund and return does not damage the product and prevent the seller from reselling it.

Furthermore, allowing refunds would eliminate the rare purpose of the profile picture project – potentially eliminating its value. Consider the example of the Bored Ape Yacht Club NFT. The highest BAYC purchase was the $3.4 million purchased in #8817 – which was minted at approximately $1,000 in April 2021. This rarity is partly a product of the “golden fleece”, a trait held by less than 1% of BAYC NFTs in the market .

Of course, if buyers can only ask for a refund if they don’t like the NFT they receive randomly during the printing process, it’s understandable that those “1% NFTs” will become more common, because buyers will stick around. looking for a refund until you get the NFT you want. If you follow the logical consequences of this thinking, there will no longer be rare NFTs in any corner of the market.

The reality is that if the law around digital assets doesn’t keep pace with the technology, there’s always the temptation to rely on irrelevant regulatory guidance, 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 brings value to all sides of the equation.

Christos Makridis is the chief operating officer and co-founder of Living Opera, a Web3 multimedia startup anchored in classical music, and a research affiliate at Columbia Business School and Stanford University. He also holds a doctorate in economics and management science and engineering from Stanford University.

This article is for general information purposes and is not intended and should not be construed as legal or investment advice. The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.



Source link

Leave a Reply