Tuesday, 13 November 2012

Protecting consumers through injunctions

Last week the European Commission published its second report on the application of the Directive 2009/22/EC on injunctions for the protection of consumers' interest. This Directive allows public authorities and consumer organisations to seek an injunction to put a stop to a trader's practice that infringes EU rules on consumer protection. Therefore, it allows for protection of collective interests of European consumers. The first report showed, however, that the procedures weren't used so much in cross-border conflicts, due to mostly their higher costs, complexity and length of time.  

The new report describes application of the Directive from 2008 onwards. It still shows that the majority of injunctions asked for were national. The highest number of injunctions was reported in Germany, Latvia, the UK, Austria and Malta. The injunctions mostly affect the telecommunications, banking and investments as well as tourism and package travel sectors. The practices that most frequently resulted in an action for injunction were unfair contract terms and unfair commercial practices. The report points out that EU consumers definitely benefit from the introduction of the Directive, however, the introduced measures are more effective for protecting consumers in the future rather than correcting past damage. Injunctions may not be perceived as a remedy for claiming damages nor are they effective against rough traders. Most Member States do not make a link between a possibility of consumer's individual (or collective) redress and granting an injunction and often are not even bound by the earlier ruling on the injunction. However, injunctions can still benefit many consumers. For example:

"For instance, in Austria an action for injunction was brought against unfair terms in the banking contracts of an Austrian bank. In August 2009 the bank informed its customers in the statement of accounts that prices for current accounts were to be increased as from 1 October in line with the increase of the consumer-price index for 2008, which amounted an increase of 3.2%. The bank referred to the index-clause in the Standard Contract Terms, which allowed the bank to automatically increase prices for continuing obligations once a year, according to the movements of the consumer-price index. This injunction measure had a significant impact on consumers, because in spring 2011 most of the other banks, which had used similar terms, refrained from automatically increasing the price, and this benefited several million clients of Austrian banks. This is a clear instance of a successful injunction having a tangible impact on compliance with the law, not only with regard to the defendant, but for the whole economic sector. Moreover, the benefit for consumers was easy to evaluate in monetary terms."(pp. 8-9)

The report identifies also problems that prevent the Injunctions Directive from being more effective, namely: financial risks linked to the proceedings, their length and complexity, limited legal effect of the rulings and obstacles in enforcement thereof. The European Commission concludes the report stating that it will continue to monitor the application of the Directive and does not see the need to amend it at this stage.

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