While the EU already has some of the strongest rules on consumer protection in the world, recent cases like the Dieselgate scandal, have shown that it is difficult to enforce them fully in practice. 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. It will also extend consumers' protection when they are online and clarify how EU law to clarify that dual quality practices misleading consumers are prohibited.
First Vice-President Timmermans said: "Today's New Deal is about delivering a fairer Single Market that benefits consumers and businesses. 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. The handful of traders who deliberately abuse European consumers' trust will be sanctioned with tougher fines."
The New Deal for Consumers will mean:
- More transparency in online market places – 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, so they know whether they are protected by consumer rights if something goes wrong.
- New consumer rights for “free” digital services – When paying for a digitalservice, consumers benefit from certain information rights and have 14 days to cancel their contract (withdrawal right). The New Deal for Consumers will now extend this right to ‘free' digital services for which consumers provide their personal data, but do not pay with money. This typically would apply to cloud storage services, social media or email accounts.
- Representative action, the European way – Under the New Deal forConsumers it will be possible for a qualified entity, such as 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. In some Member States, it is already possible for consumers to launch collective actions in courts, but now this possibility will be available in all EU countries.
This model has strong safeguards and is distinctly different from US-style class actions. Representative actions will not be open to law firms, but only to entities such as consumer organisations that are non-profit and fulfil strict eligibility criteria, monitored by a public authority. This new system will make sure European consumers can fully benefit from their rights and can obtain compensation, while avoiding the risk of abusive or unmerited litigation.
3. Introducing effective penalties for violations of EU consumer law
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. Member States are free to introduce higher maximum fines.
Following up on the Commission's guidelines from September 2017, the New Deal for Consumers will update the Unfair Commercial Practices Directive in order to make explicit that national authorities can assess and address misleading commercial practices involving the marketing of products as being identical in several EU countries, if their composition or characteristics are significantly different.
The New Deal will remove unnecessary burden for businesses, including by lifting obligations on companies as regards the consumer's withdrawal right. For instance, consumers will no longer be allowed to return products that they have already used instead of merely trying them out, and traders will no longer have to reimburse the consumers before actually receiving the returned goods.
However the review of EU consumer rules and recent EU-wide breaches of these rules last year showed that there was still room for improvement to better protect consumers.