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When it comes to facing down Big Tech, consumer rights activists are hoping collective action might do the trick.
A new EU directive that will grant consumers the right to collectively sue in cases of mass harm could lead to bigger, pan-European class actions in a few years, and the cases against the likes of Apple and TikTok are being lined up.
The directive on collective redress, finalized last year, will allow consumers across the European Union to bring forward class action cases ranging from data protection, air and passenger rights and financial services to tourism, energy and telecommunications.
While some countries already had laws allowing for collective redress, others didn’t, resulting in an uneven system exposed most starkly by Volkswagen’s emissions-cheating scandal, for which the carmaker paid billions in fines in the U.S., but is still fighting legal battles with aggrieved consumers in Europe.
With the EU’s tech-specific legislation subject to an onslaught from lobbyists, haggling from EU countries and MEPs — and still years away from being applied — consumer activists believe collective redress could be a tool to bring their complaints against tech companies and also win damages. EU countries have up to two years to download the legislation onto national legislation, but some are already preparing their cases.
The new rules allow groups to work with each other across country lines to build cases. “There may sooner or later be an effort to coordinate a single European action when companies choose to infringe consumer rights in the same way across the EU,” said Isabelle Buscke of the Federation of German Consumer Organisations.
The people vs. Big Tech
Tech companies are already being hit by class actions in EU countries with existing collective redress mechanisms.
Last month, Euroconsumers — a collection of consumer rights organizations from Spain, Italy, Belgium Brazil and Portugal — and its Italian member Altroconsumo filed a €60 million collective action lawsuit against Apple in Italy. The group is seeking compensation for being sold iPhones that were designed to stop working as well after a certain time, a practice known as planned obsolescence, which it claims is unfair and misleading. Euroconsumers filed similar cases in Belgium and Spain late last year, and is also preparing to launch a similar case in Portugal.
Marco Pierani, Euroconsumers’ director of public affairs, said the group is focusing on finding “a good balance on how to work together among the different consumer organizations.”
Buscke said data protection and the way goods and services are marketed to consumers are typical areas for collective legal action, making Big Tech a prime target. Further, “there may be a stronger focus on sustainability,” which Apple’s planned obsolescence case also touches on, she added.
Consumer groups and campaigners are already turning to courts in cases where they believe their data was mishandled.
Dutch nonprofit Somi is building a case against Chinese video-sharing app TikTok for sending data to China without permission, and illegally storing children’s data without parental permission. On its website, the group said it has “a very strong negotiating position based on the European legislation.”
Somi also said each consumer could claim up to €500 in compensation. This could become costly for TikTok if Somi gets enough complainants and the case gets picked up by other groups — potentially representing thousands more users. Euroconsumers also has a pending case against Facebook for the Cambridge Analytica scandal, asking for at least €200 per complainant.
Tech companies and industry have feared that the directive will open up the pathway for predatory law firms to create class action hubs in countries such as the Netherlands.
The directive addressed those concerns by putting limits on who can bring cases forward and how these groups are funded. Courts will also be able to dismiss “manifestly unfounded” cases.
The directive has a “loser pays” principle, which is supposed to act as an additional layer of protection against abusive litigation, meaning consumer groups will have to pick their battles carefully.
“Another thing that is key for us is to watch what happens on the other side of the ocean,” Euroconsumers’ Pierani said, referring to the fate of class action lawsuits in the U.S. Pierani felt more confident in Eurconsumers’ planned obsolescence case against Apple after the tech giant reached a $500 million settlement in the U.S. for the same practice.
“It’s not responsible for a company to treat consumers in a different way in the U.S. and in Europe,” Pierani said.
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