With the proposed amendments to the Consumer Protection Act (“CPA”), which are already under consideration in the National Assembly, Bulgaria is one step away from introducing a significantly stronger and more effective mechanism for the protection of consumers' collective rights. A key innovation in the bill is the extension of the concept of “infringement of the collective interests of consumers”. It is now accepted that any practice by a trader which cumulatively:
1) harms or is likely to harm the collective interest of consumers and;
2) contravenes certain (explicitly mentioned in the legislation) national or European laws, will be considered as a ground for a collective action.
The list of laws, the violation of which could expose the trader to liability, is extremely detailed and covers a total of over 60 legal acts (on a European and local level) - including in the areas of e-commerce, personal data protection, energy services, telecommunications and financial products, etc.
A “practice”, on the other hand, refers to any action or inaction by a trader, including the use of unfair terms and conditions in contracts with consumers.
The affected consumers will be able to claim, at their discretion, a suspesion or discontinuation of the unlawful practices and/or compensation for the damage already suffered.
In the current version of the CPA, collective actions were only brought to court by qualified local organisations (certain associations). These associations retain their legal standing, but collective actions can now also be brought (on behalf of consumers) by the Consumer Protection Commission and by special qualified foreign EU organisations.
A significant improvement in the judicial procedure is the introduction of shorter time frames for court proceedings, which will ensure a swifter response to infringements and restoration of the economic balance. Cases will be examined by the district court at the location of the infringement or the defendant's seat, and if the funding of the claim is provided by a third party, strict controls are applied to prevent potential conflicts of interest.
Another aspect of the efficiency improvements of the judicial procedure is the possibility for the court to impose preventive measures before a final judgment, including the suspension/prohibition of a particular commercial practice for a certain period of time where there are sufficient grounds to consider that the claim has merit.
If the claim seeks payment or compensation for damages suffered by consumers, the concerned parties must expressly consent to be represented by a qualified organisation in the proceedings. The court shall set a time limit for other potentially affected consumers to join the case (if they have not already authorised the qualified organisation when filing the claim).
If the claim is successful, the court shall set a time frame within which compensation must be paid to the affected consumer group. The payment could be made individually to the consumers, deposited in the qualified organization’s account and redistributed by the qualified organization, or in a special account at the general disposition of the affected consumers.
The bill is now at the discussion stage in the National Assembly, bringing it significantly closer to becoming an effective law. This is important not only for consumers, but even more so for the businesses, which will have to adapt their practices to the new legal framework. As the scope of infringements that can form the basis of class actions expands, the risk of significant financial sanctions for traders also increases. Businesses will need to step up their compliance efforts, especially in some more tightly regulated areas such as energy, telecoms and financial services.
The new legislation has the potential not only to make it easier for consumers to access justice, but also to provide a more secure and transparent environment for the protection of their rights in a wider range of economic sectors. The introduction of faster and more efficient judicial procedures is key to achieving this objective.
