EU Consumers Obtain Access to Collective Redress

Consumers across the EU are about to be granted broader opportunities for the collective defense of their rights. The new EU Directive (Collective Redress Directive) will enable consumers to seek effective judicial protection collectively when traders’ infringements of EU laws deprive them of their rights.

The background of the new stated consumers’ rules was emphasized by a recent situation arisen from the legislative differences applied to consumers who were victims of the same fraudulent car emissions claims. While American consumers have been able to address a collective redress lawsuit against the carmaker, Europeans found it quite impossible because legislation in EU countries was not always compatible and a collective mechanism that would allow more consumers to be part of such proceedings was not regulated. This was considered the milestone that revealed that European countries have some of the most robust consumer protection rules in the world.

The European Parliament has reached an initial agreement with the EU governments to give European citizens the possibility to sue companies collectively and so to make sure that such situations would not happen anymore. It is considered that, by the new stated rules, in the next 2 years, both European citizens and companies should feel considerably more protected by establishing the collective redress possibility and by ensuring safeguards for companies.

Once the legislation comes into force, consumers rights’ groups will be able to take legal action on behalf of domestic and cross-border victims of the same rights infringements.

New Rules:

• All Member States will need to ensure a legal framework that will allow collective redress for consumers. More specifically, in terms of procedure, at least one specific action mechanism shall be regulated by internal legal provisions in order to allow organizations to represent citizens that suffered a loss from a consumer contract, and so allow to seek appropriate sanctions and compensations;
• To facilitate such collective redress, each EU country shall designate a qualified entity which shall be further able to represent groups of consumers in collective cases;
• EU dispositions shall impose that the defeating party will have to pay the costs of the proceedings. The principle also called “looser pays” aims to protect companies against abusive lawsuits by raising awareness that each action must be of utter seriousness by taking the risk of an eventual loss of such civil lawsuit;
• The possibility to address collective actions shall not only be possible regarding consumers law, but also be allowed in cases involving trader violations in multiple areas, such as data protection, air and train passenger rights, financial services travel and tourism, energy, telecommunications, environment and health.

After the new Directive is adopted, all EU countries must transpose it into national law within two years.