There are some potentially major changes coming on the enforcement of consumer protection rules in 2023.
But let’s go back to basics first. ‘Enforcement’ is a buzz word today in consumer rights, both in Brussels and in national capitals. But what does it mean exactly and how is it relevant to consumers?
Let’s start with an image. Imagine you want to hang a painting in your living room. You take the time needed to find the right one for you, one that will really help to bring some sparkle to your home. However, without a nail and a hammer, the frame will lay on the ground, rapidly gathering dust.
Well, this is the same for enforcement: it is both the nail and the hammer needed to make legislation operational. Put simply, enforcement is what turns rules from pretty playthings into useful instruments.
Who are the enforcers?
Just like there are nails of many different sorts, the enforcement of consumer law is usually divided into two main pathways.
The first is public authorities monitoring markets and ensuring traders abide by the law. Where needed, those authorities may impose sanctions (e.g., fines) against rogue traders infringing the rules. This is ‘public enforcement’.
Private and public enforcement must go hand-in-hand and complement one another
The second is based on private/non-state actors (e.g., consumer organisations) filing complaints or lawsuits against traders to request the cessation of harmful practices and/or compensation. This is known as ‘private enforcement’.
European countries rely on very different mixtures of private and public enforcement at national level. However, one thing is clear today: private and public enforcement must go hand-in-hand and complement one another. This is why enforcement is increasingly being seen as a cooperation exercise involving various stakeholders working towards the same objective, which is to build markets that deliver for consumers.
Enforcement in turmoil?
However, enforcers are facing an increasing number of obstacles in their activities. This is for different reasons: the nature of infringements, the identity of the rogue traders or the capacity of the enforcers. For instance, many enforcers lack sufficient resources to perform their roles efficiently and asymmetries with powerful companies have been growing in recent years.
Enforcers are facing an increasing number of obstacles
The annual budget of some authorities amounts to the profits that some companies may make within a week. In parallel, many infringements – particularly those in the digital world – may remain unnoticed by consumers. How many of us are able to detect and then complain when we fall prey to unfair algorithms or deceptive online practices? Unfortunately, not many.
Authorities or consumer organisations may therefore not receive consumer complaints, and infringements are only detected during market studies or by whistle-blowers.
Changes ahead in Europe
Enforcement has traditionally been the Achilles’ Heel of the EU’s consumer protection framework, depriving consumers of their rights. However, this has increasingly been on the European Commission’s radar, which has progressively developed an enforcement toolbox in response. This has three main pillars, each of which is expected to undergo important developments in the coming months.
1. Representative actions: This is a landmark piece of legislation and the fruit of more than 20 years of struggle by consumer groups. It will mean consumers will be able to go to court for the first time as a group if they have suffered collective harm e.g., consumers with the same defective smartphone or washing machine. The new rules will enter into force in June. Most EU countries are currently still working on the transposition of the Representative Actions Directive, which should have been transposed already by December 2022.
2. CPC Regulation: The EU has set up a network of consumer protection authorities to deal with cross-border infringements of consumer rules. Despite being beneficial in some cases (e.g., helping consumers get reimbursed for cancelled travel during COVID-19), it has shown its limits. EU policymakers are currently considering giving more powers to the European Commission to address widespread infringement in a more coordinated and cost-effective way. In parallel, consumer organisations are increasing their efforts to cooperate with market authorities to better protect consumers.
3. ADR: If alternative dispute resolution (ADR) was still a relatively new word in the 2000s, it is relatively well-established today. Thousands of consumers have turned to consumer ADR bodies – which can be either public or private – in the recent energy crisis (e.g., for issues with energy companies) to obtain redress. The Belgian ADR ombudsman, for example, received approximately 22,000 energy-related complaints in 2022; up from 9,000 in 2021. Yet, the rules on ADR are now ten years old and a lot has changed since. Upgrades (including better standards to ensure the independence and expertise of ADR bodies) are needed to ensure that the rules still fit consumers’ needs.
How to make 2023 the year of enforcement
It’s worth remembering that enforcement only works if the enforcers have sufficient resources. There is an ongoing discussion about the way to better finance private enforcement, but the same discussion is sorely needed for public enforcement too.
Enforcement only works if the enforcers have sufficient resources
Enforcers will also need to think a bit more outside of the box in 2023. As we have seen recently with TikTok and WhatsApp, infringements are often cross-cutting. They are rarely limited to one sector (e.g., consumer protection) but have consequences in other areas as well (digital, competition, etc.) Therefore, enforcers need to take a similar approach to dealing with rogue traders.
If policy makers and authorities can get these points right – and if enforcers can work together effectively – then 2023 might just be remembered as the year of consumer law enforcement. We will be working hard to ensure that beautiful painting is hanging nicely on the wall.
For more information, please contact us: consumer-redress[at]beuc.eu
By: Andrew Canning and Alexandre Biard