New law to help consumers take ‘collective action’ against firms

People across EU will be able to join forces and take operators to court

Irish consumers will for the first time be able to take collective action against businesses who let them down or fall to live up to their commitments under new legislation to be drafted in the months ahead.

People who feel they have been wronged by any business in the EU will be able to join forces and take operators to the High Court as long as they have the support of qualified organisations and interest groups in taking their case.

Organisations and groups will be able to apply for “designated entity” status which will give them power to take enforcement action when group of consumers fall victim to a breach of rights at home or in another EU country

Minister for Enterprise Leo Varadkar was given the green light by Cabinet on Tuesday to begin drafting a law which will give designated qualified entities new powers.

This law is an EU-wide response to recent mass consumer rights breaches by private companies, such as the Volkswagen car emissions scandal in 2015 and the widespread cancellation of flights by Ryanair in 2017.

It will allow for several cross border qualified entities to come together to represent European consumers where they have been harmed by the same alleged infringement which has been caused by the same trader in several member states.

“This new law will make it easier for consumers to group together and seek redress when a large group of them have been affected by a breach of their rights, either at home or in another European country,” Mr Varadkar said.

“I know people can often feel intimidated and powerless when there’s been a large-scale consumer rights breach. By providing a way for them to act collectively with representation from a qualified entity, this new law will massively strengthen their position. Ireland currently has no mechanism for collective redress.”

‘Non-profit entities’

Mr Varadkar stressed that the new law would be different to the US class action regime as only “certain, non-specified, non-profit entities will be able to take a case. It follows on from the Consumer Rights Bill which was published last month, which extends rights over digital goods and services and makes fake reviews and other commercial practices illegal”.

Minister of State at the Department of Enterprise Robert Troy hailed the step as an “important development to improve consumers’ access to justice”.

He said that in the future when the rights of a large number of consumers are violated by the same business, “a qualified entity can launch a representative action on their behalf before the High Court. This will be a first in Irish law, and will further strengthen consumers’ rights in Ireland and across the EU”.

The “New Deal for Consumers” package was launched by the European Commission in April 2018 and aims to facilitate coordination and effective action from national consumer authorities at EU level and reinforce public enforcement action and better protection of consumer rights.

Not for profit organisations will be able to apply to the Minister for Enterprise, for designation as qualified entities and allow them to use the procedural mechanism for representative actions.

Qualified entities will be able to seek injunctive and redress relief in the High Court against a trader who has infringed the consumer protection rights of consumers. There will be mechanisms in the collective redress system to prevent abusive and opportunistic litigation.

Traders will enjoy the same legal rights and protections as they do in any other civil legal proceeding. There will be provision in the collective redress system to facilitate an out of court engagement for a qualified entity and a trader if they can negotiate an informal resolution to their grievance.