A new proposal to grant group compensation rights to consumers across the EU is at risk of being dilluted down. We can't let this happen.
By Ursula Pachl
Insurance policies which can’t even be used, flights cancelled by airlines at the last minute, dangerous materials used in medical equipment; the list of cases where people have been misled or harmed on a mass scale can go on and on.
When these scandals break, people are often in no position to receive compensation and are left paying the damages out of their own pockets. There are many painful reminders - such as the breast implants scandal or the mis-selling of insurance or investment products - where, despite massive damages to thousands of consumers by the same company, most consumers did not get a penny back.
The problem is that, unless the company is willing to provide compensation, victims need to go all the way to court to get it. And few people have the time or money to do that individually, particularly when it’s “the little man” facing a giant of a company.
Take the diesel emissions scandal, for instance, where Volkswagen cheated emissions tests across the EU to sell cars which were far more polluting than they should have been. Of the 8 million European consumers estimated to have been affected, almost none have gone to court individually, let alone got some compensation.
Volkswagen’s intransigent attitude in refusing to compensate customers in the EU – which contrasts with the situation in the US, where customers were quickly and generously compensated – illustrated to everyone just how poorly equipped consumers in the EU are. It was probably the straw which broke the camel’s back which made the European Commission act.
It proposed that in every EU country, there should be the possibility of filing what’s called a group action.
In group actions, an organisation that is eligible (usually a consumer group), represents all the consumers affected collectively. As a result, these actions are more powerful and effective than individual cases. And they are often the only way to help consumers get the justice they deserve. Individual victims need to dedicate far less energy, time and money to this kind of procedure.
Only a handful of EU countries have a functioning, and relatively easy-to-use, legal procedure in place though. These are Belgium, Portugal, Spain and Italy. Other countries either have a system which is difficult to use or don’t have one at all.
With its proposal, the European Commission finally tabled an initiative to provide better access to justice for all Europeans: a group action for collective compensation would be available everywhere in the European Union.
But what has happened since the publishing of the proposal is a scandal. Business groups, which for three decades fought off any legislative initiative to allow group actions, are now mobilising to destroy this proposal - this time with the help from the US.
A campaign spearheaded by the American Chamber of Commerce, representing big US corporations who are also active in Europe, has been undermining the legislative proposal as much as possible by lobbying the European Parliament and national governments.
The Austrian Presidency of the European Union has, from the beginning, been dragging its feet on the issue, organising only just three meetings between member states in six months, which is very low for a proposal of this importance.
Meanwhile, in the Parliament, conservative MEPs from Germany have been trying to delay and significantly water down the plan. They have proposed amendments which would gut the proposal of its most important aspects.
Their tabled amendments would even reduce the ability of consumer groups to fight illegal market practices the way they do today. This is irresponsible.
The EU must show that it can create a group action system which works for consumers, not one that is unusable because of innumerable restrictions included to placate business concerns. Fearmongering from business groups - namely about US-style class action lawsuits coming to Europe destroying swathes of the business landscape - is misinformation. The real problem is that in mass harm situations, consumers are often unable to get justice. And the companies which caused such mass harm are not held accountable.
In the EU countries with a working system of group actions, there are no cases of abuse of the procedure and no single recorded case of bankruptcy resulting from a group action. Honest businesses need not worry; it’s the “cheaters” who should.
The EU should make sure this proposal to create group actions helps consumers in an effective way and that it becomes law quickly. It is justice that consumers need, not stumbling blocks.
Ursula Pachl is the Deputy Director General of the European Consumer Organisation (BEUC).
Opinions expressed in View articles are solely those of the author