EU initiative to assist victims of consumer scams

AN EU initiative is to be set up that will help victims of consumer scams who are currently facing unsatisfactory barriers to compensation.

Launched yesterday, the European Commission is looking for the public’s views on the best way of dealing with large-scale consumer complaints and has initiated an online public consultation to find out how best to settle grievances.

Latest research by the commission shows that almost 70% of Irish customers would be more willing to defend their rights in court, if a collective redress scheme was in place, while 59% who complained to a trader were not satisfied with the way their complaint was dealt with.

EU commissioner for consumer affairs Meglena Kuneva said no satisfactory redress scheme exists.

She said there are “black holes” in the system, leaving victims of illegal activities, such as overcharging, misleading advertising or outright scams, with nowhere to go.

Studies carried out by the commission indicate that when consumers want to pursue a case, they face substantial barriers with legal fees sometimes costing more than the compensation they might eventually receive, and judicial procedures being complex and lengthy.

The proposed collective consumer redress scheme would work to ensure that consumers who find themselves victims of illegal commercial practices are compensated, and that companies are discouraged from engaging in illegal activities which give them an unfair competitive advantage over their competitors.

Violations of consumer rules include overcharging, misleading advertising on websites, or failing to provide compulsory information on financial products.

“Consumers who are victims of illegal activities, such as overcharging, misleading advertising or outright scams, have a right to compensation,” said Ms Kuneva

“Currently, particularly where there are small scattered claims, this right is often theoretical because of the obstacles to exercising it in practice. The present situation is clearly unsatisfactory. We must find a way to make the basic right to consumer redress a reality for more people.”

Only 13 of the 27 EU member states currently have systems in place that allow for collective redress for consumers.

Examples of the system working include a group of consumers who took action against a telecoms company winning compensation of €70 million.

* Comments should be submitted by email to [e-mail] by March 1, 2009.