On 4 December 2020, Directive (EU) 2020/1828 on representative actions for the protection of the collective interests of consumers was published in the Official Journal of the European Union.
The Aim of the new Redress Directive!
This Directive gives powers to organisations or public bodies designated by European Union (EU) member states to seek injunctive or redress measures on behalf of groups of consumers through representative actions (including cross-border representative actions). This includes seeking compensation from traders who infringe consumer rights in areas such as financial services, travel and tourism, energy, health, telecommunications and data protection, as appropriate and available under EU or national law.
Since both judicial and administrative procedures can effectively and efficiently serve the protection of the collective interests of consumers, it is left to the discretion of member states to determine whether representative action can be brought in judicial or administrative proceedings, or both, depending on the relevant area of law or economic sector. As with all EU Directives, the member states had to implement them in local law.
The Austrian implementation process took quite some time!
Class actions are an effective tool for compensating consumers for financial losses incurred as a result of illegal business practices. Many experts view the USA as a role model in this regard.
In Austria, up to today, only specially authorised associations such as the Chamber of Labour (AK) and the Association for Consumer Information (VKI) can bring such actions; access for consumers to class actions is severely restricted, so EFRI was forced to bring legal actions on a single case basis for victims.
Austria should have implemented Directive 2020/1828 by the end of 2022, but has not done so to date. The federal government has been a good 450 days behind schedule; and consumer associations like EFRI had to wait.
So it is definitely good news that since June 18th, 2024, there finally exists a draft law (Bundesgesetz über Qualifizierte Einrichtungen zur kollektiven Rechtsverfolgung
(Qualifizierte Einrichtungen Gesetz – QEG) from the Austrian Ministry of Justice, providing for a new possibility of representative actions in the implementation of the EU Directive on representative actions, also for Austrian consumer protection organisations like EFRI. According to the explanations, consumers should no longer only benefit from injunctions reached by consumer protection organisations, but will also be able to obtain direct redress or claims for benefits through a representative action if 50 or more people are affected. According to the proposed law joining a representative action should involve less financial expense for them than bringing an action as an individual plaintiff.
EFRI fulfils all requirements to get approved.
Sections 1 and 2 of the proposed law define the requirements for consumer protection organisations to be approved as qualifying consumer protection organisations under the new legislation.
EFRI meets all the necessary requirements and will apply for approval as soon as the law is enacted.
Update: Effective March 31, 2025, EFRI was approved as a Qualified Entity to bring cross-border class actions.
