From financial mis-selling scandals to cheat devices installed in diesel cars, consumers across the EU sometimes fall victim to products or services that cause them harm. But they usually have very little chance to get compensation in court.


Legal proceedings are expensive, time-consuming and the compensation amounts might not always be large. For small amounts, it is usually not economically viable for people to go through legal proceedings on their own, but the frustration remains. In situations of mass harm, often the only realistic option for consumers is to try to obtain compensation by going to court together and have an expert fight the case on their behalf. Unfortunately, most EU countries do not have functional, simple-to-use systems. The ease with which consumer representatives can file group claims varies enormously according to the country, and there is no EU-wide scheme.

This means that in a case like the Volkswagen emissions scandal, where consumers across the continent bought cars unaware that they were equipped with devices which cheated emissions tests, consumers could only launch a legal proceeding in a few countries. This situation was in stark contrast to the US, where Volkswagen quickly coughed up compensation as the threat of class actions loomed.

This situation has existed for too long and requires EU action now. An EU recommendation to Member States to adopt a collective redress system with minimum standards in 2013 has had little impact. A Commission report published in January 2018 shows there are still 9 Member States which do not provide any possibility to collectively claim compensation in mass harm situations. In many of the Member States with a collective redress system, people do not use the procedure either because it is too rigid, too lengthy or because there is a feeling the costs will likely outweigh the benefits.

The Commission announced at the end of 2017 it would address the issue of compensation through the review of the Injunctions Directive. The proposal is expected in April 2018 and should make it possible to claim compensation and an injunction (a court order to end a certain activity) at the same time.

BEUC is calling for a collective redress system that allows all EU consumers to access collective redress.


  • There should be a binding instrument at EU level which obliges all Member States to introduce collective redress schemes.

  • The collective redress scheme should cover all areas of consumer and competition law.

  • It should be possible to seek compensation for both material and moral damages (compensation for moral damages is currently not possible for example under the French instrument).

  • Consumer organisations should be given legal standing to bring collective cases. Their experience with enforcement actions and their reputation towards the public will ensure that only claims with merit are pursued.

  • The scheme should allow both opt-in (consumers have to notify that they are joining a case to be considered for compensation) and opt-out systems (all consumers affected are automatically added to the case unless they signal they don’t want to be). Opt-out systems allow the largest number of victims to seek compensation. Opt-out is much more effective than opt-in (on average, only around 1% of all harmed consumers opt in), and is also cheaper in administrative costs. Opt-out systems are already available in Portugal and Belgium.

  • Court fees and lawyers’ fees for consumer organisations should be limited, as is already the case in several countries.

  • Ensure judges have an active role in admitting the case, overseeing litigation costs, deciding on how victims should be informed, or whether the system should be opt-in or opt-out.

There are plenty of examples of mass harm situations where consumers are left empty-handed if there is no collective redress system in place.


In Ireland, some 160,000 people would have been in line for a claim of between €100 and €200 each for having been mis-sold a credit card protection policy. This would make the total damage equivalent to between €15 million and €30 million. However, there is no collective redress system in Ireland those consumers could use.

In Germany, in 2012 the Federal Court of Justice decided that certain contract clauses, which limited the amount of money paid out to the policyholder when a policy is terminated before it matures, were invalid. This could have been the basis for recovery claims of millions of consumers. The Consumer Association of Hamburg took action against Allianz Lebensversicherungs AG at Stuttgart District Court. According to the consumer association’s estimate, claims against Allianz added up to between €1.3 billion and €4 billion. 80 consumers had ceded their claims to the consumer association. In the end, the 80 consumers involved were refunded €114,000. However, as the recovery claims procedure used in this case is too complex to be used for large numbers of consumers, and a suitable collective redress mechanism is not available in Germany, millions of consumers were left without any compensation.

In Latvia, a large consumer credit company, BigBank has been deemed to be misleading consumers with respect to interest rates on credit cards for a period of approximately two and a half years. As a result of this unfair commercial practice, many consumers have suffered damages up to €10,000 per person. Even though the total damages are hard to measure, it is safe to assume that several thousand Latvian consumers have been victims of this practice, without collective compensatory relief being available. 

A recent predatory lending case in Slovenia involved the collaboration of Czech and Slovenian companies which were not permitted to lend money, as they were not registered as required under the Slovenian law. The Slovenian consumers’ association ZPS managed to get court rulings rendering the loan contracts void. However, they are now struggling along with individual consumers to seek compensation through separate claims, covering damages of €1,000 to €2,500 per case.

In France, after the unfair invoicing of payment notices for their rent, 318,000 consumers were left with €44 million in damages overall.


In the Netherlands, Dutch consumer organisation Consumentenbond is in court over numerous toxic financial products sold by big insurance companies with high hidden costs. The estimated total damage in these cases is between €20 billion and €30 billion.

1. Isn’t there a risk that launching court cases without merit harms the reputation of the business in question?
2. Doesn’t collective redress massively increase the amount of litigation?
3. Isn’t there a risk of a business going bankrupt following a collective redress case?
4. Why are we importing a US system into the EU?
5. Isn’t this a way for US law firms to make more money?
6. Aren’t the existing national procedures enough to act?
7. Isn’t this just an opportunity to increase profits for third party funders?
8. Won’t the erosion of the ‘loser pays’ principle just bring an abuse of litigation?


1. Isn’t there a risk that launching court cases without merit harms the reputation of the business in question?

There is a low risk of this happening because there are early stage court hearings which are there to establish if the case has merit. Only then is the court case actually launched.
Claims that defendants in the USA settle even claims without merit are not based on facts. Most settlements take place after an admissibility hearing. Only then do defendants see the case as serious and as one that could potentially succeed for the plaintiff.

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2. Doesn’t collective redress massively increase the amount of litigation?

EU Member States with a functioning collective redress mechanism do not have an increase in litigation. Even in the US, class actions do not constitute a significant part of all civil litigation cases (less than 1% of all civil suits).
On the contrary. In mass claims situations that have caused hundreds or thousands of individual cases, for example the Payment Protection Insurance (PPI) case in the UK, the burden on courts would have been reduced by having a collective redress option, because it would federate all the individual cases into one.

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3. Isn’t there a risk of a business going bankrupt following a collective redress case?

To date, there has not been a single case of bankruptcy in an EU country because of a case of collective redress.

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4. Why are we importing a US system into the EU?


The two legal systems are very different.

In the US:

  • Both parties must finance their own costs. This means that there could theoretically be situations where someone starts a case they know they have little chance of winning but this would lead to costs for the defendant (abusive cases). This is not possible in the EU.
  • In the US, there is a possibility to ask for ‘punitive damages’, which can be three times higher than the actual damages, so there is a greater financial incentive to pursue litigation. This is not possible in the EU.
  • Judges do not supervise the settlements actively. This is not possible in the EU.

But in the EU collective actions:

  • Damages would only be awarded for actual harm/loss suffered
  • Each claim would undergo an eligibility examination in which the status of the claimant and the legitimacy of the claim etc will be examined by the judge in order to prevent abuse.

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5. Isn’t this a way for US law firms to make more money?

The EU and its Member States should regulate on ‘designated entities’ i.e. those which can bring collective actions.

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6. Aren’t the existing national procedures enough to act?

Only a handful of Member States have efficient systems in place that can be used by consumers to get compensation.

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7. Isn’t this just an opportunity to increase profits for third party funders?

The procedural rules in most Member States already contain general safeguards against any kind of abuse in the civil actions.

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8. Won’t the erosion of the ‘loser pays’ principle just bring an abuse of litigation?

In a number of EU countries (Portugal, Belgium, Italy and Spain) the judges have discretion not to apply the principle fully since many years, but so far no increase of abusive litigation has been reported.

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Consumers have real difficulty in accessing a working system of collective redress generally.


GREEN: only in Belgium, Italy, Portugal, Spain and Sweden are the systems working well. We have coloured these countries green.

ORANGE: in Austria, Bulgaria, Croatia, Denmark, Finland, France, Germany, Lithuania, Malta, the Netherlands, Portugal, Romania, Slovenia and the UK, a procedure exists but it has either serious flaws or the system is too recent to assess.

RED: in Cyprus, the Czech Republic, Estonia, Greece, Hungary, Ireland, Latvia, Luxembourg and Slovakia there is either no procedure or a procedure which cannot be used efficiently by consumers.



Our position paper:

click here to read

Lack of compensation for harm suffered is a major loophole in a legal system and allows for illegal profit to be retained by business. Judicial collective redress for consumers currently operates nationally only in limited number of Member States. Even where it is available, the models and effectiveness of the mechanisms vary significantly. They also do not provide for cross-border solutions. This leads to a significant discrimination in access to justice, to the detriment of consumers.

Click here to read.


Further reading:


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The European Consumer Organisation
Europäischer Verbraucherverband
Bureau Européen des Unions de Consommateurs

Rue d'Arlon, 80 Bte 1 
B - 1040 Bruxelles

Tel: +32 2 743 15 90

Deputy Director Generalpicture
Deputy Director General
Ursula Pachl
Senior Legal Officerpicture
Senior Legal Officer
Augusta Maciulevičiūtė
Senior Legal Officerpicture
Senior Legal Officer
Christoph Schmon
Enforcement Officerpicture
Enforcement Officer
Patrycja Gautier
Legal Assistantpicture
Legal Assistant
Alexandros Goniadis
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Communications Officer
Sébastien Pant