Speech Kyprianou voor OESO-workshop inzake schikking consumentenklachten (en)

Markos Kyprianou

European Commissioner for Health and Consumer Protection




Speech at the OECD Workshop on Consumer Dispute Resolution and redress in the Global Marketplace

OECD Workshop on Consumer Dispute Resolution and redress in the Global Marketplace
Washington, 19 April 2005

I am delighted to be here today at the opening of this workshop.

Today's theme "Consumer Dispute Resolution and Redress in the Global Marketplace" reflects real, "top of the agenda" priorities for consumers and consumer policy makers.

I would first like to thank the OECD Committee on Consumer Policy and the US Federal Trade Commission for organising this event which will focus on a crucial aspect of consumer protection.

The effective enforcement of consumer protection laws is inherently difficult. Consumer protection laws apply to millions of commercial transactions each and every day. But consumers, and also businesses, do not always understand the relevant law. Complex transactions such as those related to financial services are particularly hard for them to judge.

These obstacles are compounded by progressive changes to our economies and our society. The increasingly complex nature of transactions, particularly the growth in services, is one factor. The development of new retail mediums, notably the Internet, is another.

Effective enforcement of consumer laws becomes even more difficult in cross-border transactions when traders and consumers face different laws and procedures, and may speak different languages. Increasingly integrated global markets require us to take a matching global approach towards enforcement and redress mechanisms.

Given the size and complexity of the problem, it is not surprising that there is no simple straightforward answer to the need for effective enforcement.

Enforcement must include a full spectrum of actions by all parties concerned: businesses, self regulatory bodies, consumer organisations and public authorities, as well as of course the individual consumer.

Why should we bother about consumer redress? Two reasons:

First - effective and efficient consumer redress is an important deterrent to unlawful behaviour.

But second and perhaps more importantly, it is the acid test of consumer protection. We can and must prevent harm to consumers through laws and enforcement measures that work in practice.

Sometimes things don't work as smoothly as they should. If consumers don't get their money back when they deserve to, consumer protection has failed not only those consumers but damage is also inflicted on honest traders and the market as a whole.

The European Commission has taken action in this regard in two principal ways.

First, it was fundamental to tackle the sharp end of the spectrum of infringements by acting to stop rogue traders targeting consumers across borders.

The recent adopted Regulation on Consumer Protection Cooperation links up national enforcement authorities in the EU Member States enabling them to take co-ordinated action in the most difficult cases against rogue traders.

Consumer organisations also have a role to play in seeking national or cross-border injunctions to stop infringements. They can seek judgements that clarify ambiguities in consumer law.

Second, the European Commission has acted to improve the capacity of consumers themselves to seek redress.

For consumers, resorting to traditional litigation is frequently neither practical nor cost effective. Most cross-border disputes tend not to be followed up by consumers, largely because the goods or services involved have a relatively low economic value, especially when compared with the potentially high cost of seeking legal settlement.

Alternative dispute resolution schemes, ADR schemes for short, aim to provide access to simple, low cost and effective means of redress for both businesses and consumers. However, for such mechanisms to succeed, consumers and businesses need to have confidence in the system.

Two Recommendations adopted by the European Commission - the first for ADR schemes which either propose or impose a solution to resolve a dispute, and the second for ADR schemes which lead to a settlement between the parties by common consent - established quality criteria that each ADR scheme should offer to its users.

Compliance with these criteria seeks to guarantee for both traders and consumers that their disputes will be treated with rigor, fairness and independence. The Recommendations apply to both on-line and off-line ADR.

To address the practical obstacles consumers face in knowing their rights and how to seek redress when shopping across borders, the European Commission, together with the Member States, has created a network of information and advice centres - the European Consumer Centres Network (ECC-Net).

The Network provides consumers with a full "one-stop" information and advice service for cross border shopping, including assistance in resolving complaints and disputes with traders, and accessing an appropriate ADR scheme or court procedure.

The network also plays an important role in raising consumer and business awareness of the existence and added value of ADR schemes.

ECC-NET today comprises 23 Centres in 21 Member States and also extends beyond EU borders to Norway and Iceland. This network is complemented by another EU network, FIN-Net - a network of ADRs specialising in financial services.

In addition, my colleague Franco Frattini - the European Commissioner responsible for justice, liberty and security - is leading efforts to facilitate easy access to justice for citizens in general, and consumers in particular.

The Commission's proposal for a European Directive on mediation in civil and commercial matters aims to ensure a sound relationship between the mediation process and judicial proceedings by establishing common EU rules on a number of key aspects of civil procedure.

It also provides the necessary tool for the courts of the Member States to actively promote the use of mediation, without making mediation compulsory or subject to specific sanctions.

Also, a recent proposal for a Regulation establishing a European Small Claims Procedure aims to simplify and speed up litigation where the value of a claim does not exceed 2000 euros.

Both of these proposals include measures to facilitate enforcement of ADR agreements or court decisions.

Once the legislative process is complete, the European Union will have in place a robust legal framework that will serve to empower all the key actors in cross-border, as well as domestic, situations.

Some work, however, remains to be done and some questions have yet to be answered. I hope this workshop will result in some interesting new thoughts and ideas to feed into this subject.

As consumer transactions - and indeed the activities of rogue traders - are becoming ever more international, close cooperation with non-EU countries is essential and needs to be stepped up. The Regulation on Consumer Protection Cooperation provides for co-operation agreements to be drawn up with the public authorities of third counties.

Current work to facilitate consumer access to ADR in cross-border cases will have to be consolidated. Not all consumer disputes can be solved through ADR due to the lack of such schemes in certain key sectors - such as timeshare or package travel. In some cases businesses are reluctant to sign up to ADR. Further stimulus for more quality ADRs to be created, both online and offline, is needed.

Businesses should be made more aware of the added value of ADR. This can be a vital tool for maintaining business reputation and for fostering and preserving good customer relations. It can save management time and has the potential to turn an initially unhappy customer into an advocate of the business. I am sure the discussions during this workshop will examine this issue in further detail.

And other areas need to be further explored. A recent Eurobarometer opinion survey showed that 70% of EU citizens would be encouraged to defend their rights before a court if they could take joint action with other citizens.

Actions by a group of consumers, by consumer organisations representing a group of consumers, or even by public authorities, can be a major disincentive to unlawful conduct and can be useful in tackling rogue traders. In the US, the recent experience of the Skybiz case is interesting in this regard.

To conclude, the European Commission views effective enforcement of consumer legislation as a priority. Consumer legislation will only deliver tangible positive effects for consumers if properly enforced.

If consumer rights are to have a real and practical value, consumers need confidence and reassurance that if something goes wrong they can and will get access to justice. This remains a big challenge.

It is clear that we all have to think further about how best to address this challenge. I wish you all a stimulating and thought-provoking Workshop. I look forward to hearing of the results of your deliberations.