ABSTRACT
Directive 2020/1828 on representative actions to protect the collective interests of consumers provides a long-awaited means of redress in the form of representative collective actions for EU consumers (RCRD). RCRD encompasses remedies for consumers against breaches of European Union (E.U.) law in numerous fields of consumer protection, including against the abuses or overreaches of the financial services industry. After transposing the Directive, consumer debtors residing in all E.U. Member States will be compensated with the help of the designated qualified entities (QE). The Directive applies to all Member States, including Denmark, and Member States where such a representative action mechanism was not in place before. Even though only some national laws currently include collective action remedies for debt collection practices in the E.U. Member Stats, the introduction of the 2020/1828 Directive provides an opportunity for Member States to regulate procedures against abusive private debt collection practices to debtors all over the Union.
The chapter focuses on the possibility of tackling abusive private debt collection practices using the representative collective actions introduced by RCRD. Abusive private debt collection practices become subject to representative actions to protect the collective interests of consumers by their inclusion in specifically listed legislative acts in Annex 1 to the Directive. Private debt collectors are subject to the Directive by virtue of their status of ‘traders,’ as defined by the Directive. Highlighting the relevant changes that will be introduced sheds light on the obstacles that can affect the private debt collection industry and the debtors’ advantages, following the implementation of RCRD in EU MS. It is a particularly important task to reflect on changes to be expected by Member States where such measures have not been traditionally common. The chapter focuses on (1) what implications does the Directive hold for the specific activity of private debt collection entities especially in Member States where collective actions were not mainly utilized before, and (2) how can harm to consumers from abusive debt collection be effectively combatted with redress measures, following the implementation of the Directive.
After the analysis, the chapter reveals that assessing and enforcing compensatory redress and fairness in settlements will be difficult in those E.U. Member States where the collective representative action tradition is scarce or new regarding debt collection. Also, where sector-specific regulation of debt collection practices is not in place, enforcing redress can entail additional difficulties.
