Whilst consumers have been at the heart of EU legislation since the early inception of the European Union, Directive (EU) 2020/1828 of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC (hereinafter the ‘Directive’) is expected to bolster the avenues that may be availed to ensure the proper and effective enforcement of EU consumer protection laws. –
The Directive, which entered into force on 24th of December 2020, shall be transposed by EU Member States by 5th December 2022, with the resultant na6tional measures to have effect as from 25th June 2023.
The Directive aims at granting more powers to public bodies situated within the European Union to seek injunctive or redress measures on behalf of groups of consumers through the introduction of the so-called ‘representative actions’.
Specific organisations (referred to as ‘qualified entities’) are empowered by the Directive with the right to bring collective actions, also knows as ‘collective redress’, in instances of ‘mass harm’ violations under more than sixty directives listed in Annex I. These Directives refer to product liability, unfair terms in consumer contracts, unfair commercial practices, e-commerce, passenger rights, and financial services.
EU Member States are permitted to designate entities (also known as ‘qualified entities’) that would be entrusted with the task of bringing representative actions on behalf of consumers, which entities are to be listed in a public register maintained by EU Member States and the European Commission respectively.
In turn, one of the obligations of qualified entities is to provide competent courts with sufficient information about the consumer, the underlying claims and the remedies being sought, which would enable courts to determine the admissibility of representative actions. The cooperation between qualified entities from various Member States is considered beneficial for a more effective resort to cross-border representative actions, acting as an enabler for actions of such nature.
The Directive introduces a variety of consumer redress mechanisms including injunctive measures aimed at ceasing or prohibiting a current practice or prevent an imminent one, monetary compensation, product replacement or repair, termination of a contract, price reduction, and reimbursement of the price paid, as the case may be.
In this regard, Member States must ensure that:
It is noteworthy that the remedies contemplated by the Directive are without prejudice to any existing remedies that may be availed of under EU or national law and which are not expressly attached to representative actions.
The EU Member States must also guarantee that:
Cost of proceedings
The costs of legal proceedings can be spread as follows:
Member States are empowered to impose penalties for failure or refusal to comply with an injunctive measure, provision of information obligation or disclosure of evidence obligation.
Ambit of the Directive and discretion of Member States
Member States may exercise their discretion to extend the scope of applicability of the procedural and redress mechanisms contemplated by the Directive to disputes falling outside the remit of Annex I. Furthermore, Member States are free to determine whether such mechanisms are to be applied through administrative or judicial proceedings.
Impact of the Directive
One of the major areas of concern experienced in the field of EU Consumer Law has been the disparity between consumer protection on paper and in practice, leading to a situation of a lack of enforcement of consumer rights with a prevalence of non-compliance with consumer protection laws.
Acknowledging this market failure, the Directive has introduced a new EU-wide representative action to protect consumers when there are continuous violations of their rights under the more than sixty Directives listed in Annex I to the Directive.
The implementation of the Directive will further contribute to strengthening consumer confidence in the EU internal market, as well as ensuring the availability of concrete and tangible measures of redress, specific monetary compensation from traders who infringe the rights of consumers across a vast array of product and service offerings.
For further information on the implications of the EU’s proposed Digital Services Act and how it may impact you, please do not hesitate to contact us at [email protected].
Author: Stephanie Marinova