Inside the 14-day refund guarantee — Austrian §11 FAGG explained

If you subscribe to software on the internet today, refund policies fall on a spectrum from "stated prominently, one click away" to "buried in a legal appendix, obtainable only by exchanging angry emails with a support agent named Brad." The difference between these two postures is almost entirely about who the company is hoping their customer will become.

At Virtual Host AI, we built our refund flow the way consumer protection law in Austria — where we're based — says it must be built. And we built it into the app, where you can use it in thirty seconds, instead of behind a ticket queue.

This post explains what §11 FAGG is, what it legally requires of us, and what we went further on.

What is §11 FAGG?

FAGG stands for Fern- und Auswärtsgeschäfte-Gesetz — literally "Distance and Off-Premises Business Act." It's Austria's implementation of EU directive 2011/83/EU, which created consumer-protection rules for any purchase a consumer makes without being physically present in a store.

§11 is the specific section covering the right of withdrawal. It says: a consumer who enters into a distance contract (e.g., a SaaS subscription) has 14 days to cancel the contract, no questions asked, with no penalty. The seller must refund the full purchase price, including any shipping costs, within 14 days of the withdrawal notice.

Crucially, the law says the withdrawal process must be "easy" — the seller can't hide behind complex forms, bury the instructions, or require phone calls. If the information isn't clearly presented, the withdrawal window extends to 12 months.

What that means for SaaS subscriptions

Two important nuances for software.

The 14-day clock starts at the moment the contract forms — which for a SaaS is usually the moment payment is completed and access is granted. Not 14 days from the end of a billing cycle. Not 14 days from "activation." The clock starts when you pay.

The user can use the service during the window and still invoke withdrawal. This is the counter-intuitive bit. A customer can subscribe, use the service for 13 days, and on day 14 still claim their full refund. The law doesn't allow sellers to prorate the refund for days used — unless the seller explicitly informed the buyer that using the service would waive the withdrawal right. Most SaaS companies don't do this, either because they don't want to signal their product isn't worth trying, or because they haven't thought about it. We didn't.

So: 14 days of full-featured use, full refund on day 14 if you cancel. That's the default posture.

How most SaaS companies handle this badly

Most SaaS companies know about §11 FAGG (and its equivalents across the EU). They handle it badly, and the failure modes are familiar if you've ever tried to get a refund online.

Hiding the button. The "cancel and refund" path is buried in the billing settings behind three confirmation dialogs, and involves a "tell us why you're leaving" survey you can't skip. This is technically legal only because the law doesn't prohibit friction. But it's a bad-faith reading of "easy."

Support-ticket-only. You email support, wait 48 hours for a response, and the reply directs you to a form you have to fill out. The company is hoping you give up. This is actively illegal under §4b FAGG, which requires the cancellation mechanism to be as easy as the signup mechanism. If signup was one click, cancel has to be one click.

Proration-only. The company refunds a prorated amount based on days used. This is illegal under §11 FAGG without the explicit waiver we mentioned above. Most companies do it anyway because few consumers are willing to fight over €12.

How we built the refund flow

Virtual Host AI's 14-day refund is a single button on the subscription page. Click "Cancel everything + refund" while you're inside the window, confirm in a modal that spells out exactly what will happen, and the following occurs automatically:

• Your Stripe subscription is cancelled immediately.
• Every paid invoice on that subscription is refunded in full to your card.
• Every apartment in your account is deactivated — autopilot, calendar sync, upselling all turn off.
• Your account stays accessible but the service stops running.

The refund lands on your card within 5-10 business days (Stripe's timeline, not ours). We don't take a processing fee. We don't require a reason. We don't send a "sorry to see you go" survey.

The one-time constraint, and why

Here's the part that's deliberately limited: the full-refund path is once per user account. If you've already exercised your 14-day right once, future subscriptions fall under normal cancellation (cancel any time, service continues to the paid period end, no refund).

Two reasons.

The law actually supports this — §11 FAGG applies to the first distance contract. Once you've exercised it, subsequent distance contracts with the same seller can be structured differently, and our Terms do structure them that way.

The second reason is economic. If anyone could subscribe, use us for 13 days, refund, then subscribe again to start another 14-day window, we'd go out of business, which would hurt everyone else. The one-time limit is what keeps the guarantee sustainable.

We enforce the limit two ways:

1. The user row has a withdrawal_used flag that flips to true after a successful refund, blocking the path under the same account.
2. The apartment IDs (from Smoobu) get globally unique — so creating a new account and reconnecting the same apartments fails at the integration step. This closes the "register a second account" loophole.

What this posture says about us

The refund policy is a signal about what kind of company we want to be. Customers who leave happy are more valuable than customers trapped by inertia. If our product doesn't earn its keep in the first 14 days, we'd rather let you go with a full refund than collect another three months of subscription fees from an unhappy user.

Austrian law mandated the floor. We built the ceiling.

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