The Representative Actions for the Protection of the Collective Interest of Consumers Bill 2023 means that consumers, in Ireland or any EU country, can join together to file collective actions against companies, on a national and European stage for infringements of their rights under consumer legislation.
It is landmark legislation that has the potential to significantly transform the litigation landscape in Ireland, throwing corporate reputations into the full glare of publicity. The intent is to provide more effective remedies to consumers for mass breaches of consumer law.
Qualified entities will represent the shared interests of consumers who have experienced similar infringements by traders to their rights as consumers in areas such as data protection, product liability, financial services, tourism, travel, energy, telecommunications and the environment.
In accordance with the bill and at a potentially high cost, businesses will be required to inform the group of consumers represented in the action of any settlements or decisions that have been made, within a strict time frame.
Irish companies with a consumer base spreading across the EU must also be wary of becoming a target of any class-action lawsuit which originates in another Member State.
Whether it be provoked by faulty products or privacy concerns, companies and their communications departments must protect against a reputation-destroying lawsuit and have, not just legal readiness but also robust communications systems in place to deal with publicity-generating class action suits.
Class actions tend to be high up on the news agenda, more so than individual cases, as the stakes are usually higher.
National and international media coverage will no doubt disrupt a company’s operations and impact its reputation, irrespective of a court verdict.
It is essential, therefore, that firms prepare for the new legal landscape with robust and tested crisis management and reputation strategies in place and strong public relations support. How companies comport themselves in public will be as important as the case hearing and outcome.
A class-action lawsuit may be more attractive to a consumer who is reluctant to bear arduous judicial proceedings alone.
Damages from a class-action settlement won’t necessarily be spread evenly, with a plaintiff’s payout depending on a variety of factors such as number of claimants involved, severity of injury and cost of litigation.
So, will class actions grow in Europe? It is certain that legal departments will be working hand in glove with communications departments to ensure preparedness and manage legal and reputation risks. Irish businesses with a consumer base across the EU will have to be ready for any consumer representative action commenced in another member state as well as for EU-wide publicity it could generate.
When the downfall of a firm’s reputation is caused by anti-consumer or illegal behaviour, or even allegations of such, crisis management plans get to be tested in real time – in the court of public opinion especially.
Preparation is key. By prioritising reputation management, developing a robust crisis strategy and having in place strong PR litigation supports, firms will be better equipped to navigate an evolving world where information and legal protection flows freely across EU borders and the power of consumer collective action is amplified and protected in law.
Ita Gibney is executive chair of Gibney Communications and has been at the forefront of many corporate crises in her 30-year communications career
