Half a year after the Minister of Justice’s draft bill was accepted by the cabinet, Germany’s consumer collective action law was approved by the legislature. It goes into effect today, October 13, 2023.
The law provides Germany with its own type of consumer class action by empowering certain qualified associations to bring bundled claims of consumers against companies. On consumers’ behalf, these associations can sue companies directly for payment and other remedies. The law significantly changes the risk exposure for companies active in Germany.
In our previous Compliance Concourse post, we summarized the key mechanisms of the law. You can find that post here.
Two noteworthy changes were made before the draft bill was turned into law:
- Consumers and small enterprises can join a consumer class action led by a qualified association. This general principle remains unchanged. However, the threshold for qualifying as a small enterprise was lowered. Under the final version of the law, only enterprises with no more than 10 employees and an annual turnover of less than EUR 2 million are considered small enterprises and may join an action.
- A potential reimbursement claim of a company who compensated a consumer as part of a class action under the new law is now linked to a time limit. Under the new law the company must inform the consumer in writing within nine months since the respective payment if the company intends to re-claim the compensation payment (i.e., because it turned out that the consumer was not entitled to the relief sought by the association).
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