EU Parliament approves new collective redress mechanisms for consumers

The CRD introduces the following key changes to existing consumer redress rules:

• an EU-wide harmonised mass claims regime for domestic and cross-border “mass harm” – this allows designated consumer organisations (“qualified entities”) to bring claims with or without a consumer mandate (in other words, both on an opt-in and opt-out basis)
• the possibility to seek both injunctive and redress measures through mass claims
• safeguards protecting businesses against lawsuits that abuse the system – these safeguards include:
• the “loser pays principle”
• extensive requirements for entities qualified to bring mass claims, such as limitations on external funding
• exclusion of punitive damages.

The CRD complements, but does not replace, existing EU and domestic collective redress mechanisms in specific areas, such as data protection. It remains to be seen how the EU member states will implement the CRD into national law, as they have wide discretion in deciding whether to incorporate the CRD into existing or new legislation.