Consumer Enforcement [EU]
A framework for collective redress (class actions)
Recommendation 2013/396/EU on common principles for injunctive and compensatory collective redress mechanisms in EU countries
It sets out a series of common non-binding principles for national collective redress* mechanisms.
The aim is to enable citizens and companies to enforce their rights granted to them under European Union (EU) law where these have been infringed.
These redress mechanisms should be available in different areas where EU law grants rights to citizens and companies, such as in consumer protection, competition, environmental protection and financial services.
Key Points
The main principles are laid down in a European Commission recommendation, published in parallel with a communication which suggests that all EU countries introduce collective redress mechanisms based on agreed principles. These principles are as follows:
Claimants should be able to seek court orders to cease violations of their rights granted by EU law (‘injunctive relief’) and to claim damages for harm caused by such violations (‘compensatory relief’) in a case where a large number of persons are harmed by the same illegal practice.
Collective redress procedures must be fair, equitable, timely and not prohibitively expensive.
Collective redress systems should be based on the ‘opt-in’ principle. Under this principle, potential claimants who have not directly expressed their consent are not members of the group and therefore, may not benefit directly from a favourable outcome of the collective redress proceedings.
There should be procedural safeguards to avoid abuse of collective redress systems such as:
a ban on punitive (i.e. excessively high) damages and interest;
entities representing claimants should not be profit-making;
a ban on the payment of contingency fees to lawyers.
The losing party is required to pay the winning party’s legal costs.
The judge has a key role in the collective litigation* to effectively manage the case and must be vigilant against any possible abuses.
Claimants should be able to settle the case by means of collective consensual dispute resolution mechanisms (i.e. procedures whereby parties reach consensus on a solution).
Application & Background
EU countries were invited to apply these principles no later than 26 July 2015.
Collective redress facilitates access to justice by those whose rights have been violated by one and the same entity. It allows them to enforce their rights collectively where they would not have done on an individual basis because of the cost or the time that it entails.
The EU framework for collective redress complements the existing mechanisms at EU level namely:
the European Small Claims Procedure,
the directive on alternative dispute resolution,
the directive on certain aspects of mediation in civil and commercial matters, or
the directive on actions for damages under national law for infringements of competition law.
For more information, see:
Judicial redress – collective redress on the European Commission’s website.
KEY TERMS
Collective redress: a mechanism that results in the ending or preventing of an unlawful business practice that affects a group of claimants or the compensation for the harm caused by these practices.
Group/ collective litigation: a lawsuit brought by a group of claimants.
MAIN DOCUMENT
Commission Recommendation 2013/396/EU of 11 June 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law (OJ L 201, 26.7.2013, pp. 60–65)
RELATED DOCUMENTS
Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: ‘Towards a European Horizontal Framework for Collective Redress’ (COM(2013) 401 final, 11 June 2013)
Solving consumer–trader disputes arising from online shopping
Regulation (EU) No 524/2013 on online dispute resolution for consumer disputes
It aims to create an online dispute resolution (ODR) platform (website) at EU level.
Consumers and traders will be able to use the platform to resolve disputes when they have a problem with a product or service that they have bought anywhere in the European Union (EU).
The complaint procedure involves both parties and the mediationbody (alternative dispute resolution (ADR)) they agree to use. These bodies — some of which operate online — offer a neutral party such as an ombudsman or mediator. Their job is to propose or impose a solution or to bring the parties together so they can find a solution.
The entire procedure can be handled quickly online, so most disputes should be settled within 90 days.
ODR platform
The European Commission will develop, operate and maintain the ODR platform. It will be launched in January 2016 and will be:
an interactive and user-friendly website;
open to any customer or trader in the EU;
available in all EU official languages;
free of charge.
The platform has several functions. These include offering an electronic complaint form, informing the respondent party about the complaint, identifying national mediation bodies and electronic case management.
Each EU country must designate one ODR contact point, hosting at least two ODR advisers. The Commission will also set up a network of ODR contact points.
Once the electronic complaint form has been submitted to the ODR platform, the platform will quickly contact and seek a response from the respondent party. It will also transmit the complaint to the mediation body that the parties agree to use. If the mediation body agrees to deal with the dispute, it will strive to resolve the dispute quickly and inform the ODR platform of the results of the procedure.
Alternative dispute resolution
The ODR platform can be accessed through the Your Europe portal. It will also be connected to all the national mediation bodies that have been set up and notified to the European Commission, in line with the EU alternative dispute resolution (ADR) directive.
The ODR regulation and ADR directive were both adopted in May 2013.
The ODR platform is accessible to consumers and traders since 15 February 2016.
Application & Background
It has applied since 9 January 2016.
For more information, see:
Alternative and Online Dispute Resolution (ADR/ODR) on the European Commission’s website
Consumer dispute resolution on the Your Europe website.
MAIN DOCUMENT
Regulation (EU) No 524/2013 of the European Parliament and of the Council of 21 May 2013 on online dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Regulation on consumer ODR) (OJ L 165, 18.6.2013, pp. 1–12)
RELATED DOCUMENTS
Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) (OJ L 165, 18.6.2013, pp. 63–79)
Commission Implementing Regulation (EU) 2015/1051 of 1 July 2015 on the modalities for the exercise of the functions of the online dispute resolution platform, on the modalities of the electronic complaint form and on the modalities of the cooperation between contact points provided for in Regulation (EU) No 524/2013 of the European Parliament and of the Council on online dispute resolution for consumer disputes (OJ L 171, 2.7.2015, pp. 1–4)
Cooperation between national authorities on consumer protection laws
Regulation (EU) 2017/2394 — cooperation between national authorities for the enforcement of consumer protection laws
It aims to protect consumers against cross-border infringements to EU consumer law by modernising the cooperation of the relevant national authorities in EU, European Economic Area (EEA) and European Free Trade Association (EFTA) countries among themselves and with the European Commission.
The new rules help increase consumers’ and businesses’ trust in e-commerce within the EU.
It repeals and replaces Regulation (EC) No 2006/2004 as of 17 January 2020.
Scope
The regulation covers 26 EU laws that protect consumers’ interests listed in its annex (new ones may be added in the future to extend the scope of the Regulation to new legislative areas) and it applies in case of any infringement of those laws.
These infringements can be:
intra-EU infringements: where consumers live in an EU country other than that in which
the infringement took place
the trader responsible is based or
where the relevant evidence or assets are to be found;
widespread infringements: an act or an omission contrary to EU consumer protection law that harms or is likely to harm the collective interests of consumers in at least 2 EU countries other than the country in which
it originated or took place
the trader responsible for it is based
where the evidence or assets of the trader involved are to be found; or
any acts or omissions contrary to EU consumer protection laws that harm or are likely to harm the collective interests of consumers and that have common features, including
the same unlawful practice
the same interest being infringed and
that are occurring concurrently
committed by the same trader, in at least 3 EU countries;
widespread infringements with an EU dimension: the consumers affected reside in at least two thirds of the EU countries, representing at least two thirds of the EU population.
The infringement can be an act or an omission, and may have ceased before enforcement starts or is completed.
Competent authorities
Each EU country must designate and provide resources for:
a single liaison office responsible for coordinating investigation and enforcement activities and for ensuring effective cooperation;
one or more competent authorities responsible for the application of the regulation.
EU countries may also involve designated bodies, where necessary, to gather information regarding an infringement or to take enforcement measures, under certain conditions of the regulation.
The regulation lists the minimum investigative and enforcement powers of the competent authorities, including the power to obtain commitments from a trader to cease an infringement or to provide remedies to the affected consumers .
Moreover, authorities will also be able to:
request information from domain registrars and banks to detect the identity of the responsible trader;
carry out test purchases (‘mystery shopping’) to check geographical discrimination or after-sales conditions (e.g. withdrawal rights); and
order the removal of online content if necessary.
Mutual assistance
For intra-EU infringements, the regulation lays out the procedure for requests for information and for enforcement measures from one EU country to another.
Authorities must respond to requests for information within 30 days unless otherwise agreed, and must apply appropriate enforcement measures without delay and normally within 6 months. The regulation also covers the conditions under which such a request may be turned down.
Coordinated action
Where there is a reasonable suspicion of a widespread infringement, the authorities concerned must alert without delay the Commission, other competent authorities and liaison offices, and launch coordinated action where agreed, with a designated coordinator.
The Commission must report any suspected infringements of which it has become aware to the national authorities. If there is a suspicion of a wide-scale EU-wide infringement, national authorities must conduct appropriate investigations and start a coordinated action if such investigations confirm that an infringement might be taking place. Coordinated actions to address widespread infringements with an EU dimension must always be coordinated by the Commission.
EU countries may refuse to participate in a coordinated action, for example if there are already judicial proceedings or if an investigation has shown that the actual or potential effects of the alleged infringement are negligible in that country.
EU-wide activities
The regulation also introduces a new EU-wide market alert system, so that emerging threats are detected more rapidly. This new alert system combines the system already existing under the consumer protection cooperation regulation (Regulation (EC) No 2006/2004) with a wider exchange of relevant and necessary information.
In addition, certain external bodies (such as consumer and trade associations, the European Consumer Centres and designated bodies given this power by the EU countries or by the Commission) will also be able to send alerts (‘external alerts’). This increases the role of stakeholders in the enforcement of consumer protection law.
The authorities may also decide to conduct sweeps* to detect infringements, but these must normally be coordinated by the Commission.
Data protection
Authorities may directly request relevant data from third parties in accordance with Directive 2000/31/EC (on e-commerce) and respecting data protection legislation (Regulation (EC) No 45/2001 on European Data Protection Supervisor, Regulation (EU) 2016/679 — general data protection regulation (GDPR) and Directive (EU) 2016/680 — Protecting personal data when being used by police and criminal justice authorities).
Application & Background
It applies from 17 January 2020.
For more information, see:
Coordinated enforcement of consumer rights (European Commission).
KEY TERMS
Sweeps: coordinated investigations of a consumer market.
MAIN DOCUMENT
Regulation (EU) 2017/2394 of the European Parliament and of the Council of 12 December 2017 on cooperation between national authorities responsible for the enforcement of consumer protection laws and repealing Regulation (EC) No 2006/2004 (OJ L 345, 27.12.2017, pp. 1-26)
RELATED DOCUMENTS
Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ L 119, 4.5.2016, pp. 1-88)
Directive (EU) 2016/680 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data by competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and on the free movement of such data, and repealing Council Framework Decision 2008/977/JHA (OJ L 119, 4.5.2016, pp. 89-131)
Successive amendments to Regulation (EU) 2016/680 have been incorporated in the original text. This consolidated version is of documentary value only.
Regulation (EC) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws (the Regulation on consumer protection cooperation) (OJ L 364, 9.12.2004, pp. 1-11)
See consolidated version.
Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data (OJ L 8, 12.1.2001, pp. 1-22)
See consolidated version.
Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) (OJ L 178, 17.7.2000, pp. 1-16)
Alternative dispute resolution for consumer disputes
Directive 2013/11/EU on alternative resolutions for disputes between traders and consumers
It ensures that EU consumers can submit their contractual dispute with an EU trader* over a product or service to an alternative dispute resolution (ADR) entity — a recognised body whose role is to resolve disputes by means of ADR procedures, i.e. without going to court.
It sets out binding quality requirements for ADR entities and procedures to ensure aspects such as transparency, independence, fairness and effectiveness.
Compliance is ensured by national competent authorities designated by EU countries.
It obliges traders to inform consumers about ADR when the former have committed or are obliged to use ADR and when they cannot bilaterally resolve a dispute with the consumer.
Key Points
EU countries must ensure that all contractual disputes that arise from the sale of goods or provision of services — between consumers residing in the EU and traders established in the EU — can be submitted to an ADR entity. It applies to both online and offline sales and services.
The goal of this legislation is to ensure the proper functioning of the EU’s single market.
ADR offers consumers an affordable, simple and fast way of resolving disputes, such as when a trader refuses to repair a product or to make a refund to which a consumer is entitled.
ADR entities involve a neutral party, such as a mediator, ombudsman or complaints board, that attempts to resolve the dispute through an ADR procedure. Depending on the form of ADR procedure that a given
ADR entity operates, the neutral party can either:
propose or impose a solution; or
bring the parties together to help them find a solution.
All ADR entities must meet binding quality requirements, guaranteeing that they operate in an effective, fair, independent and transparent way.
Each EU country must designate one or several competent authorities, which have national oversight over ADR entities and ensure their compliance with the quality requirements. The competent authorities establish national lists of ADR entities. Only disputes resolution entities that comply with the quality requirements can be included as ‘ADR entities’ in those lists.
Traders who agree or are obliged to use ADR must inform consumers about ADR on their websites as well as in their general terms and conditions. They must also inform consumers about ADR when a dispute cannot be settled directly between the consumer and the trader.
In the interest of transparency, EU countries must ensure that ADR entities’ websites provide clear and understandable information. This includes contact details and the types of disputes that these entities can deal with, as well as costs, average length and legal effect of the outcome of the ADR procedure. ADR entities must also make publicly available on their websites the annual activity reports containing information on the disputes that they have handled.
ADR entities must cooperate in the resolution of disputes within the EU. They must also exchange best practices among themselves and with national authorities about the settlement of disputes.
This directive applies to all market sectors, with the exception of health and higher education.
Application & Background
It has applied since 8 July 2013. EU countries had to incorporate it into national law by 9 July 2015.
For more information, see:
‘Alternative and online dispute resolution (ADR/ODR)’ on the European Commission’s website.
KEY TERMS
Trader: a person or business that sells a product or service.
MAIN DOCUMENT
Directive 2013/11/EU of the European Parliament and of the Council of 21 May 2013 on alternative dispute resolution for consumer disputes and amending Regulation (EC) No 2006/2004 and Directive 2009/22/EC (Directive on consumer ADR) (OJ L 165, 18.6.2013, pp. 63-79)
RELATED DOCUMENTS
Regulation (EC) No 2006/2004 of the European Parliament and of the Council of 27 October 2004 on cooperation between national authorities responsible for the enforcement of consumer protection laws (the regulation on consumer protection cooperation) (OJ L 364, 9.12.2004, pp. 1-11)
Successive amendments to Regulation (EC) No 2006/2004 have been incorporated in the original text. This consolidated version is of documentary value only.
Directive 2009/22/EC of the European Parliament and of the Council of 23 April 2009 on injunctions for the protection of consumers’ interests (OJ L 110, 1.5.2009, pp. 30-36)
See consolidated version
Directive 2008/52/EC of the European Parliament and of the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters (OJ L 136, 24.5.2008, pp. 3-8)