The Austrian version of the European Collective Redress Directive!

Verbandsklagen in Austria

The Austrian version of the European Collective Redress Directive!

On December 4th, 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.

 

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 may effectively and efficiently serve the protection of the collective interests of consumers, it is left to Member States’ discretion as to whether the representative action can be brought in judicial or administrative proceedings, or both, depending on the relevant area of law or relevant economic section. 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 instrument when it comes to compensating consumers for financial losses suffered as a result of illegal business practices. Many experts see the USA as a role model here.

In Austria up to today, only specially authorized 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 the 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 organizations like EFRI. According to the explanations, consumers should no longer only benefit from injunctions reached by consumer protection organizations, 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 fulfilles all requirements to get approved.

Sections 1 and 2 of the proposed law define the requirements for consumer protection organizations to be approved as qualifying consumer protection organizations under the new legislation.

EFRI meets all the necessary requirements and will apply for approval as soon as the law is enacted.

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