You are here

EU unveils consumer protections, with tougher fines for companies that cheat

[BRUSSELS] The EU on Wednesday unveiled rules to bolster European consumer protections by ensuring "tougher fines" for cheating companies and legal ways to compensate victims.

The European Commission proposed a "new deal" for consumers after the Volkswagen "Dieselgate" scandal where the bloc's consumers have not been compensated.

But the 28-nation European Union executive said the rules will not usher in US-style lawsuits across the bloc.

"In a globalised world where the big companies have a huge advantage over individual consumers we need to level the odds," EU commissioner for consumers Vera Jourova said.

Market voices on:

"With stronger sanctions linked to the annual turnover of a company, consumer authorities will finally get teeth to punish the cheaters," Ms Jourova said.

The move to provide stronger protection for consumers came as part of a broader effort to boost public support for the European project amid a surge of anti-EU populist movements and as Brexit looms.

Commission Vice President Frans Timmermans warned traders they will face "tougher fines" if they abuse trust and said consumers will have a right to collective redress, including compensation.

Under rules still to be approved by the European Parliament and the member states, online consumers will be informed clearly if they are buying products or services from a company or a private person.

Online consumers will also be informed when a search result is being paid for by a trader.

The rules would also ensure free digital services when consumers offer personal data, such as for cloud storage services, social media or email accounts.

Consumer or other qualified organisations will be able in all member states to seek compensation, replacement or repair on behalf of a group of consumers harmed.

Such collective action currently exists only in some member states.

Unlike US-style class action lawsuits, European cases will not be open to law firms.

They will only be open to consumer organisations and other groups that are non-profit and fulfil strict criteria.

The proposed rules will ensure consumers in all member states - not just in some - can seek financial compensation or end contracts if they face aggressive or misleading marketing.

Under the proposal, national consumer authorities can impose penalties in a coordinated way.

If consumers are harmed across the bloc, the trader will face a maximum fine of four percent of annual turnover in each member state. Member states can also impose higher maximum fines.

Unlike in the United States, the European Union struggled to punish Volkswagen for emissions cheating that erupted in 2015 and ensure customers were compensated.