EU proposes giving consumers more clout against corporate abuse

The EU plans more powers for consumers to sue firms such as Volkswagen (VW) after the Dieselgate emissions scandal showed the limits of consumer protection authorities to curb corporate cheating.

Wednesday’s proposal by the EU executive would allow some groups to launch collective action and give consumer protection authorities higher sanctions for rule breakers.

Amid frustration in Brussels with rule-flouting by the powerful technology and automotive industries, fines will increase to as much as 4% of annual turnover for companies deemed to have trampled on the rights of a large group of consumers.

“Consumer authorities will finally get teeth to punish the cheaters,” Justice Commissioner Vera Jourova said. “It cannot be cheap to cheat.” Along with a separate plan to improve transparency over how science shapes policy, officials couched the moves as the EU becoming more responsive to citizens’ worries — such as the potential cancer risk of glyphosate, which is used in Monsanto’s Roundup.

The commission wants to make more of the evidence used to decide policy on food safety publicly availably.

EU regulators say that after VW was caught using software to cheat emissions tests by US authorities they lacked the tools to ensure EU car owners received the same kind of compensation offered to US clients.

Jourova said only two national consumer protection authorities imposed fines on VW, amounting to €5.5m.

“This is nothing in comparison to what Volkswagen paid in the United States,” she said.

The European Consumer Organisation said the move was long overdue, but cautioned that judges and national authorities would still hold sway over what might be a lengthy process.

Business groups said the plan, which still need approval from national governments and the European Parliament, could lead to a proliferation of lawsuits, saying EU citizens already enjoy some of the strongest consumer protection rules.

Defending the draft rules, Jourova said they would not allow US-style profit-seeking class action suits. Law firms would not be allowed to sue firms, only citizens’ rights groups would — a legal recourse now available in only a handful of member states.

In a bid to deliver Commission President Jean-Claude Juncker’s promise of a “new deal for consumers”, the plan also tackles concerns about online rights and food brands being sold with inferior ingredients.

Adding pressure on firms like Facebook and Google’s Gmail, it would extend EU consumer law to “free” digital services for which consumers provide personal data, such as cloud storage services, social media and e-mail accounts.

Consumers would also get more information on contracts and the right to cancel them within 14 days.