The information was translated using the ChatGPT service.
On the session held on September 14 this year, the Saeima confirmed amendments to the Consumer Rights Law and amendments to the Civil Procedure Law in the final reading, introducing in Latvia a new, effective, and powerful procedural mechanism for consumer collective claims.
The collective claim regulation will ensure a high level of consumer rights protection and facilitate consumer access to court to receive compensation for damages caused by consumer rights violations. Often, consumers choose not to go to court with individual claims because it is expensive, complicated, time-consuming, and consumers often find themselves in an unequal situation compared to the merchant and the resources available to the merchant. Such regulation will increase consumer confidence in the internal market, enhance consumer opportunities to enforce their rights, promote fair competition, and create equal competitive conditions for merchants operating in the internal market.
Globalization and digitalization have increased the possibility that the same manufacturer, seller, or service provider violation can cause harm to a large number of consumers. A collective claim means that consumers who have suffered damage as a result of a violation will not have to go to court with individual claims. Instead, a qualified institution – a consumer association that meets the legal requirements and to which the Consumer Rights Protection Center (CRPC) has granted the status of a qualified institution – will raise the collective claim on behalf of consumers.
Qualified institutions in Latvia can be any associations mentioned in Article 22 of the Consumer Rights Protection Law (CRPL), other associations if one of their goals is to protect consumer interests, including those composed of members from more than one European Union Member State, and which want to obtain the status of a qualified institution. To gain such a status, an association will have to submit an application to CRPC with a request to grant the status of a qualified institution permanently or for raising specific consumer collective claims, proving compliance with all CRPL criteria. Compliance with the specified criteria will confirm that the association is capable and has resources to represent collective consumer interests. The list of qualified institutions in Latvia will be published on the CRPC website and updated regularly.
It is essential to emphasize that CRPC currently monitors consumer collective interests according to its competence. Evaluating detected consumer rights violations that can cause, are causing, or have already caused damage to consumer collective interests, its nature and impact, as well as other essential circumstances, CRPC has the right to take several actions, including initiating written commitments, prohibiting the violation, deciding on a temporary regulation, etc. However, as crucial as it is to prevent a violation, it is also essential to ensure compensation for the damage caused to consumers as a result of the violation. The current regulation provides CRPC with the right to detect and stop the violation, but does not provide an opportunity for consumers to receive compensation for damages - to receive compensation for damages, consumers must individually file a claim in court.
The amendments ensure that a qualified institution for consumer protection has the opportunity to both address the supervisory and control authority for violation prevention and the right to submit a consumer collective claim to court. In court, a consumer collective claim can be raised for a prohibition measure (detection and stopping of a violation) and legal protection measures (compensation, repair, exchange, price reduction, termination of the contract, etc.). In the case of an already existing CRPC decision on the detection of a violation of consumer collective interests, a collective claim can only be raised for legal protection purposes. Thus, in one case, the court will detect and stop the violation and compensate the consumers who have applied for the collective claim for the damage caused to them. In another case, based on the already detected violation of consumer collective interests, it will compensate the consumers who have applied for the collective claim for the damage caused to them.
Collective claims can be raised for violations in a wide range of sectors, including financial services, data protection, travel and tourism, energy, or telecommunications – as long as it concerns consumer rights protection. The mechanism introduced in Latvia provides that consumers must express their desire to join the collective claim. The qualified institution will inform consumers about the opportunity to apply for the collective claim, informing the appropriate communication means to reach as many consumers affected by the violation as possible. Those consumers who have not been able to apply initially for various reasons will be given another opportunity to apply for the collective claim when the claim is filed in court. When applying for a collective claim, the consumer must give consent to the qualified institution to represent the consumer, indicate their claim, and submit documents substantiating the claim. If the qualified institution finds that the consumer's application does not meet the specified requirements, it informs the consumer about the deficiencies and sets a deadline for their elimination. If the deficiencies are not eliminated within the specified deadline, the consumer is informed that participation in the consumer collective claim is denied.
After summarizing the consumer applications, the qualified institution turns to the merchant with a claim for compensation for the damage caused to consumers. The merchant is given at least a 14-day period in which it can evaluate the qualified institution's application and fulfill the claim in full or offer to conclude an agreement. If the parties fail to agree, the qualified institution goes to court.
The qualified institution can go to court if the following conditions are met:
- There are at least five consumers in the consumer collective claim;
- Consumer claims are against the same defendant or defendants;
- Consumer claims are based on identical or similar factual and legal circumstances.
Collective claims are a new category of cases for which a different procedural mechanism is provided. Therefore, the Civil Procedure Law is supplemented with a new 30.9 chapter, which provides for exceptions from the general order to be taken into account when examining cases arising from consumer collective claims.
To ensure that the legal costs associated with consumer collective claims do not prevent qualified institutions from effectively exercising their rights, the Bill provides that qualified institutions are exempt from paying court costs. This requirement is included, considering that consumer collective claims are raised in the public interest, i.e., they protect consumer collective interests, and the activity of qualified institutions is non-profit.
Detailed amendments to the Consumer Rights Law and amendments to the Civil Procedure Law can be found on the Saeima website. The amendments to the laws are developed to ensure the adoption of the requirements of the European Parliament and Council Directive (EU) 2020/1828 of November 25, 2020, on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC (hereinafter – Directive 2020/1828) in national legal acts.
The aim of Directive 2020/1828 is to promote the functioning of the EU internal market and achieve a high level of consumer rights protection. The requirements of this directive are consistent with the EU objective - to provide consumers with a high level of protection against risks and threats to their safety and economic interests. It is essential to detect and prevent a violation that has caused, is causing, or could cause harm to consumer collective interests to not cause harm to an even more extensive range of consumers. However, as essential as it is to prevent a violation, it is also crucial to ensure compensation for the damage caused to consumers as a result of the violation. The collective claim regulation will provide an effective mechanism for both violation prevention and compensation for the damage caused.
Economic Ministry Public Relations Department Phone: 67013193 Email: prese@em.gov.lv