The possibility to bring representative actions on behalf of consumers against merchants exists as well in the current version of the Consumer Protection Act (“CPA”). The proposed draft Law on Amendment and Supplement to the CPA provides for relevant changes aimed at further improving the protection of consumer rights.
Firstly, the scope of the concept of “infringement of the collective interests of consumers” is broadened - it is stipulated that any practice that harms or may harm the interests of consumers and contravenes the provisions of local legal acts and regulations, as well as EU acts (exhaustively listed) should be understood as such. The list is extremely detailed and covers more than 50 pieces of legislation. The term “practice”, in turn, refers to any act or omission of merchants, including the stipulation of unfair clauses in contracts with consumers.
The subject-matter of the representation actions may be the ceasing/prohibition of unlawful trade practices or a claim for compensation for the damage caused to the consumers. The right to bring actions on behalf of consumers is conferred to the so-called “qualified organisations” (with legal-organizational form of associations) entered in a special list approved by the Minister of Economic Affairs and meeting certain special conditions; to the CPC and also to qualified organisations from other Member States. Qualified organisations are obliged to publish on their websites up-to-date information on the status and outcome of judicial cases.
The draft Law also sets out the judicial procedure by which these claims will be examined. Actions shall be filed with the district court of the place where the infringement was committed or where the defendant has its registered seat and address. If the collective action is funded by a third party, the court will check carefully for conflicts of interest. If a conflict of interest is suspected, the qualified organization must provide additional information regarding the funds used upon request of the court.
Where the purpose of the action is to cease/prohibit an unlawful practice, the court may allow certain preventive (interim) measures - for example, ordering the trader to stop the practice until the conclusion of the case. If the claim is upheld, the trader may be obliged to publicise the judgment or make a public corrective statement.
If the claim seeks payment of compensation for damage suffered to the collective interests of consumers, the consumers concerned must expressly consent to be represented in the proceedings by the qualified organisation. The court shall set a term for other potentially affected consumers to join the proceedings (if they have not already authorised the qualified organisation when the claim has been filed). If the claim is upheld, the court shall set a timeframe within which the compensation awarded 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 subsequently, or in a special account at the general disposition of the affected consumers.
The changes are certainly important for that portion of the business that deals directly with end customers (consumers), considering the significant scope of potential violations that could be the basis for a representative action. If the affected consumer group includes a larger number of persons, the damages awarded by the court could possibly reach high amounts. For this reason, businesses should make additional efforts to maximise its compliance with domestic and EU law.
