Good news for consumers in Europe. The European Commission on April 11 proposed what it calls a New Deal for Consumers to ensure that all European consumers fully benefit from their rights under EU law.
Despite having some of the world’s toughest rules on consumer protection, the EU has recently been rocked by cases like the Dieselgate scandal. These cases have shown that it is difficult to enforce existing rules fully in practice.
According to a European Commission press release, the New Deal for Consumers will empower qualified entities to launch representative actions on behalf of consumers and introduce stronger sanctioning powers for member states’ consumer authorities.
“Today’s New Deal is about delivering a fairer Single Market that benefits consumers and businesses,” said First Vice-President Frans Timmermans. “We introduce a European collective redress right for when groups of consumers have suffered harm, like we have seen in the recent past, with proper safeguards so there can be no misuse.
“Consumers will know who they are buying from online, and when sellers have paid to appear in search results. The majority of traders who play fair will see burdens lifted,” he added. “The handful of traders who deliberately abuse European consumers’ trust will be sanctioned with tougher fines.”
In turn, Věra Jourová, Commissioner for Justice, Consumers and Gender Equality, added: “In a globalised world where the big companies have a huge advantage over individual consumers we need to level the odds. Representative actions, in the European way, will bring more fairness to consumers, not more business for law firms. And with stronger sanctions linked to the annual turnover of a company, consumer authorities will finally get teeth to punish the cheaters. It cannot be cheap to cheat.”
Outlining the New Deal for Consumers, the Commission stressed there will be more transparency in online market places. For instance, when buying from an online market place, consumers will have to be clearly informed about whether they are buying products or services from a trader or from a private person.
There will also be more transparency on search results on online platforms. This means consumers will be clearly informed when a search result is being paid for by a trader.
The New Deal for Consumers will also make it possible for a consumer organisation to seek redress, such as compensation, replacement or repair, on behalf of a group of consumers that have been harmed by an illegal commercial practice.
Under the proposal, national consumer authorities will have the power to impose effective, proportionate and dissuasive penalties in a coordinated manner. For widespread infringements that affect consumers in several EU member states, the available maximum fine will be 4% of the trader’s annual turnover in each respective member state.
The new rules also introduce more flexibility in the way traders can communicate with consumers, allowing them to also use web forms or chats instead of email, provided the consumers can keep track of their communication with the trader.
MEPs weigh in
The Commission’s proposals will be discussed by the European Parliament and the Council.
Commenting on the New Deal for Consumers, the European People’s Party (EPP) Group in the European Parliament stressed that class actions do not necessarily increase consumer protection.
“Only if they are done in the right way will individual consumers effectively get redress,” said Andreas Schwab MEP, EPP Group Spokesman in the European Parliament’s Internal Market and Consumer Protection Committee.
However, the proposal for more transparency in online sales is more than welcome: “While shopping online, it must be clear for consumers at first sight whether EU law applies or not. Consumers have the right to know if they are buying from a professional trader or a private person.”
As for the Progressive Alliance of Socialists and Democrats (S&D) Group in the European Parliament, the Commission’s package of proposals is a step in the right direction.
“However, we regret that this proposal is limited to consumers,” said S&D spokesperson for legal affairs, Sylvia-Yvonne Kaufmann. “We see a need for all citizens to have easier access to justice, for example farmers affected by chemical spills or workers harmed by companies who do not respect health and safety regulations.”
S&D spokesperson for the internal market, Nicola Danti added: “Following the Dieselgate scandal, VW were forced to pay large amounts of compensation to US consumers, while European consumers got nothing… Although collective redress is the main aspect of the consumer´s package, there are other important elements that need to be underlined. The proposition of new stricter penalties for companies who cause widespread infringements that affect consumers is also a good idea, as are proposals to make it easier for consumers to know whom they are buying from online.”
Similarly, the European Conservatives and Reformists (ECR) Group’s Internal Market co-ordinator Daniel Dalton, who will pilot proposals through the European Parliament as a rapporteur, noted that the aim is to produce legislation that is effective, practical and proportionate.
“That will take time and we must not allow the Commission’s desire to complete the process before the elections in May 2019 override the need to get this right,” he said.