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In 1999, Felicitas Weigmann  lost the licence for her Berlin cafe Psst! , because the cafe was being used to initiate contacts between customers and prostitutes and had an attached room-rental also owned by Weigmann. She sued the city, arguing that society’s position had changed and prostitution no longer qualified as offending the moral order. The judge conducted an extensive investigation and solicited a large number of opinions. In December 2000 the court agreed with Weigmann’s claim. This ruling is considered as precedent and important factor in the realization of the Prostitution Law of 1 January 2002. Only after an appeal process though, filed by the Berlin town district, was Weigmann to regain her cafe license in October 2002.
The compulsory registration and testing of prostitutes was abandoned in 2001. Since then, anonymous, free and voluntary health testing has been made available to everyone, including illegal immigrants. Many brothel operators require these tests.
Legislative reform (2002)
In 2002 a one-page law sponsored by the Green Party was passed by the ruling coalition of Social Democrats and Greens in the Bundestag. The law removed the general prohibition on furthering prostitution and allowed prostitutes to obtain regular work contracts. The law’s rationale stated that prostitution should not be considered as immoral anymore.
The law has been criticized as having not effectively changed the situation of the prostitutes, often because the prostitutes themselves don’t want to change their working conditions and contracts.  The German government issued a report on the law’s impact in January 2007, concluding that few prostitutes had taken advantage of regular work contracts and that work conditions had improved only slightly, if at all. 
Between 2000 and 2003, the visa issuing policies of German consulates were liberalized. The opposition claimed that this resulted in an increase in human trafficking and prostitutes entering the country illegally, especially from Ukraine. The episode led to hearings in 2005 and is known as the German Visa Affair 2005.
In 2004 the Turkish gang leader Necati Arabaci was sentenced to 9 years in prison for pimping, human trafficking, assault, extortion, weapons violations and racketeering.  His gang of bouncers controlled the night clubs in Cologne’s entertainment district, the Ring, where they befriended girls in order to exploit them as prostitutes.  After Arabaci’s arrest, informants overheard threats against the responsible prosecutor, who received police protection and fled the country in 2007 when Arabaci was deported to Turkey. 
In 2004, the large FKK-brothel Colosseum opened in Augsburg, and police suspected a connection to Arabaci’s gang, which owned several similar establishments and was supposedly directed from prison by its convicted leader.  After several raids, police determined that the managers of the brothel dictated the prices that the women had to charge, prohibited them from sitting in groups or using cell phones during work, set the work hours, searched rooms and handbags, and made them work completely nude (charging a penalty of 10 euros per infraction). In April 2006, five men were charged with pimping. The court quashed the charges, arguing that the prostitution law of 2002 created a regular employer-employee relationship and thus gave the employer certain rights to direct the working conditions. Colosseum remained in business. 
Early in 2005, English media reported that a woman refusing to take a job as a prostitute might have her unemployment benefits reduced or removed altogether.  A similar story had appeared in mid-2003; a woman received a job offer through a private employment agency. In this case however, the agency apologized for the mistake, stating that a request for a prostitute would normally have been rejected, but the client misled them, describing the position as “a female barkeeper.” To date, there have been no reported cases of women actually losing benefits in such a case, and the employment agencies have stated that women would not be made to work in prostitution. 
In March 2007 the brothel “Pascha” in Cologne announced that senior citizens above the age of 66 would receive a discount during afternoons; half of the price of 50 euros for a “normal session” would be covered by the house. Earlier, in 2004, a 20% discount for long-term unemployed had been announced by a brothel in Dresden. 
Also in 2007, authorities in Berlin began to close several apartment brothels that had existed for years. They cited a 1983 court decision that found that the inevitable disturbances caused by brothels were incompatible with residential areas. Prostitutes’ organizations and brothel owners fought these efforts. They commissioned a study that concluded that apartment brothels in general neither promote criminality nor disturb neighbors. 
The economic downturn of 2009 has resulted in changes at some brothels. Reduced prices and free promotions are now found. Some changes, the result of modern marketing tools, rebates, gimmicks. Brothels introducing all-inclusive flat-rates, free shuttle buses, discounts for seniors and taxi drivers. “Day passes.” Some brothels reportedly including loyalty cards, group sex parties, rebates for golf players. Clients have reported reducing their number of weekly visits.