To mark World Consumer Day, it should be emphasised that over the past year, a number of significant changes have been adopted and entered into force in Latvia to strengthen consumer protection in Latvia.
The most significant new developments in consumer protection are the amendments to the Consumer Rights Law approved by the Saeima last September and the amendments to the Civil Procedure Law introducing a new procedural mechanism for consumer class actions in Latvia.
Globalisation and digitalisation have increased the possibility that the same infringement by a manufacturer, seller or service provider may cause harm to a large number of consumers.
Class actions mean that consumers who are harmed by an infringement will not have to take individual action in court, but will be able to bring a class action on behalf of consumers through a qualified body - a consumer association - which will be granted the status of qualified body.
To date, the Consumer Rights Protection Centre has received one application for Qualified Body status.
To protect consumers, a qualified body will be able to both apply to the supervisory and control body for the prevention of infringements and to bring a consumer class action in court. Collective actions can be brought for infringements in a wide range of sectors, including for example financial services, data protection, travel and tourism, energy or telecommunications - as far as consumer protection is concerned.
The qualified body will inform consumers about the possibility of applying for a collective action in order to reach as many consumers affected by the infringement as possible. When applying for a collective action, the consumer will have to give his/her consent to the qualified body to represent him/her, state his/her claim and submit documents supporting the claim. After collecting the consumer applications, the qualified body will approach the trader with a claim for compensation for the damage caused to consumers. The trader will have 14 days to assess the application from the qualified body, settle the claim in full or offer to enter into an agreement. If the parties fail to reach an agreement, the qualified body will apply to the courts.
The qualified body will be able to apply to the courts if the following conditions are met:
- there are at least five consumers in the consumer class action;
- the consumer claims are against the same defendant or defendants;
- the consumer claims are based on the same or similar factual and legal circumstances.
Class actions are a new category of court cases for which a different procedural mechanism is foreseen.
Consequently, a new Chapter 30.9 has been added to the Civil Procedure Law, which provides for exceptions to the general procedure to be taken into account when dealing with cases arising from consumer class actions.
In order to ensure that the costs of litigation related to consumer class actions do not prevent qualified institutions from effectively exercising their rights, qualified institutions are exempted from paying court costs. This requirement is included in view of the fact that consumer class actions are brought in the public interest, i.e. they protect the collective interests of consumers and the activities of qualified entities are of a non-profit nature.
At the same time, other important changes in consumer protection adopted in the last year should be noted.
In order to facilitate consumers' ability to remortgage, to promote competition among credit providers, to develop credit institutions' solutions for mortgage borrowers and to reduce high mortgage rates, amendments to four laws - the Consumer Rights Protection Law, the Credit Institutions Law, the Notarial Law and the Insurance Contract Law - were adopted at the beginning of this year. These amendments reduce existing barriers to faster and cheaper re-crediting, making the re-crediting process significantly easier for consumers.
The amendments to the Competition Law also provide that the Competition Council will monitor the implementation of the Digital Markets Act in Latvia and support the European Commission in its investigative activities. The Digital Markets Act aims to ensure a level playing field for companies operating in the digital environment.
However, until the Information Society Services Act is amended, the Consumer Rights Protection Centre will act as the Digital Agenda Monitor in Latvia. The Digital Services Act is the first piece of legislation of its kind in the world, aimed at making the online (internet) environment safer, more predictable and more trustworthy for all its users.