Explaining why the Commission decided to launch a green paper on the issue yesterday, EU Consumer Affairs Commissioner Meglena Kuneva said "black holes in [Europe's] redress system" were "leaving consumers with nowhere to go".
At present, just thirteen EU countries have systems in place to offer shoppers collective redress, all of which differ from one another. Moreover, research carried out by the EU executive revealed that "high costs, risk of litigation and complex and lengthy procedures mean that one out of five European consumers will not go to court to seek redress for claims less than 1,000 euro".
Widespread violations of consumer rules identified by the Commission's 'Green Paper on Consumer Collective Redress' as potential areas for joint action include overcharging customers via hidden charges or over-billing, misleading advertising on websites and failing to provide compulsory information on financial products.
If undetected, the EU executive says such practices "cause considerable damage to consumers, generate unfair competition and distort markets". "We must find a way to make the basic right to consumer redress a reality for more people," Commissioner Kuneva declared, describing the situation at present as "clearly unsatisfactory".
A collective redress system would "ensure that consumers harmed by illegal commercial malpractice are compensated for their losses" and "enhances respect for EU law by discouraging companies from engaging in illegal activities which give them an unfair competitive advantage over other operators," argues the green paper.
The EU executive's proposals outline means of "facilitating redress in situations where large numbers of consumers have been harmed by a single trader's practice […] in breach of consumer law". But they do not seek to address breaches of competition law, which are covered by a separate 'white paper' adopted last April.
Moreover, Commissioner Kuneva insisted that the plans were "not in any way a blueprint for a US-style system of class action for damages". "We are not going to go down that road. Not by the front door and not by the back door," she said.
Specifically, the green paper sets out four options to be debated with stakeholders:
- Taking no immediate action;
- Facilitating cooperation between EU member states to extend national collective redress systems to consumers in countries with no such mechanisms;
- Introducing binding or non-binding measures for a collective redress judicial procedure to exist throughout the Union, and;
- Developing policy instruments to strengthen consumer redress.
Such instruments could include collective consumer alternative dispute mechanisms, giving national enforcement authorities the power to request traders to compensate consumers and extending small claims to deal with mass claims, according to the paper.
Despite these ideas, EU consumer groups were disappointed with the scope of the proposals. "It seems the European Commission is going round in circles, as the green paper lists four main options which can be combined in various ways, and there is no proposal for a single concrete action," complained Monique Goyens, director-general of BEUC, an NGO representing consumers throughout the bloc.
"While several [EU countries] have moved or are moving towards different systems of collective redress, the Commission […] lacks ambition and, instead of drawing conclusions from the previous consultation rounds, is just engaging in another consultation exercise, during which all parties will simply repeat their arguments," the consumer body complained.
The consultation will remain open until 1 March 2009.
