On the 25th of January 2023, Paul Price, co-founder of Top Dog Studios, shared on Twitter that UK citizens can request a refund on their NFT purchases worth over $50.
Something caught my eye on the Porsche NFT mint page that might just change the entire game for everyone.
And no one is talking about it… 👇🧵 pic.twitter.com/Vd4Mzidvhk
— Paul Price (@darkp0rt) January 25, 2023
He got this realization after looking at the Porsche NFT mint page. There was an option added by the Porsche legal team that he believes would change the entire NFT game. This addition is a “check box” that allows the user to agree to waive their right of withdrawal after paying and receiving the NFT.
The aim of that carefully warded disclaimer is to explain that the UK citizen’s right of withdrawal allows users to request a refund on any digital product they paid for and received within 14 days after receiving it. The current definition of “digital asset” involves digital downloadables, books, in-game purchases, posters, and things bought online. It wouldn’t be difficult to argue that NFTs are within the category of “digital assets.” Still, there is no precedence set for NFTs to be covered under this law, and it would take a seriously grieved or pro bono lawyer to set such a precedent in court.
Outside the UK, the European Union and other countries have consumer laws to protect them from digitally purchased assets under the distance selling regulation. Thus Porsche is opting to fully refund users within 14 days of minting its NFTs. Note, though, that the Porsche mint site requires its users to opt out of their right to withdraw. This covers every legal ground for a refund if things go south.
What about other NFT mint projects aside from that Porsche, can users request refunds even if the mint date has passed 14 days?
According to Paul, yes, it’s possible. Under the same UK law, if a seller doesn’t inform the customer of his right of withdrawal, then the period automatically extends from 14 days to one year. And if the seller chooses to ignore the law, they risk paying compensation, fines, or even a prison sentence.
Paul then demonstrated this by emailing Yuga Labs for a refund for his Otherdeed NFT based on his statutory rights under UK law, asking them to escalate to their legal team properly. He concluded by advising founders to consult legal practitioners and add a clause to protect their project.
the exceptions are clearly listed on the UK gov website pic.twitter.com/vvOnAei7Ke
— 0xjustadev.eth (⛽️,📉) (@0xjustadev) January 26, 2023
In a satiric response, a Twitter user, @0xjustadev, compared buying NFTs to gambling and how the law doesn’t cover gambling activities.
