Consumers face a ‘postcode lottery’ securing compensation from big business 

Connected Consumers founder Liz Coll explores how global brands found guilty of treating consumers unfairly in one country are often reluctant to give up the fight on the same issue in another country.

A win for consumer group claimants in one country doesn’t mean defendants will stop fighting on the same issue in another jurisdiction. At best they can be found to be delaying access to justice, at worst they are denying it using legal loopholes. It’s time for big business to stop playing legal games and start treating consumers equally wherever they happen to live.  

Since opt-out collective action rights for competition claims were made available to UK consumers in 2015, the number of actions against big brands has dramatically increased. 

Consumer Voice reported in June that the total number of people affected by 12 consumer lawsuits filed with the specialist competition court adds up to around 254 million, leaving £36 billion potentially owed to UK consumers who have been ripped off by big business. This number is growing as more cases are launched.  

The hope is that this sea change in access to justice will give companies an additional financial incentive to behave and treat consumers fairly. But this isn’t always the case when  you consider how brands are currently treating consumers across international borders. 

Consumers across Europe treated differently by rule-breaking brands 

Different results for different folks is an issue that the EU, with its more established class action regimes, is already familiar with.

Let’s take the case of two consumers, one living in Belgium, one in Germany. They both bought the same model of car, in the same colour, made at the same factory. They both experienced the same problem – an illegal defeat device in the vehicle software that distorted the amount of pollutants that would be emitted. A device that broke environmental regulations, harmed public health, misled consumers and denied them the right to an informed choice. 

Our German car owner can claim up to £5,460 in compensation. Next door in Belgium, our misled owner is still waiting for redress, 8 years after the company admitted they had fitted the software. 

Volkswagen ‘dieselgate’ scandal is a case in point 

German car brand Volkswagen (VW) reached a settlement in 2016 to pay out up to £8,220 in compensation to affected US diesel car owners for cheating emission tests and deceiving its customers. It was fined £2.22 billion to compensate for the environmental damage caused.

In Germany, VW and Verbraucherzentrale Bundesverband (VZBV), an umbrella organisation for 41 German consumer associations, reached a settlement agreement in 2020 which saw around 260,000 German consumers receive between £1,780 to £5,460 in compensation each. 

At the time, the VW Board of directors was challenged on why the same redress was not extended to consumers in Belgium; they stated it was because they had ‘not incurred any loss or damage’. 

Belgian VW customers were left looking on in envy at UK consumers who in 2022 secured damages of around £2,000 each via a group action as VW sought to avoid a UK court appearance. 

Marco Scialdone the head of litigation and collective action lead for Euroconsumers – a consumer group that has pioneered the coordination of class actions in four countries (Belgium, Italy, Portugal and Spain) – is frustrated by the drawn out process: 

‘Volkswagen, as a company, is active throughout Europe and has benefited significantly from the advantages given to it by the European Union. However, when it comes to taking responsibility, the Dieselgate scandal is only being resolved between Volkswagen and German consumers and Volkswagen and British consumers.’ 

A ruling in July 2023 finally awarded Belgian consumers compensation of 5% of the purchase price of the affected car – but they still haven’t received any money eight years after the case was launched. 

In Italy, consumers are still waiting on a ruling from the court of appeal. And a claim in Portugal was not able to proceed as the legal rules concerning the definition of affected group of consumers have not been met. 

Scialdone argues: ‘The time has come to put an end to this discrimination.The time has come for Volkswagen to sit down with the consumer organisations of the Euroconsumers group to find together the best solution in the interest of consumers.’

Consumers denied justice by different legal frameworks

Consumers with strong claims are being denied justice because a company is able to take advantage of all the different legal frameworks and collective procedures across different countries.  

A principle of parity should stand – companies should be consistent in compensating consumers who’ve experienced the same harm. Volkswagen’s approach is at odds given unequivocal judgements against the company have been made in some of the highest courts in other European countries.

Will UK consumers be hard done by as cases across borders conclude?

There are quite a few digital service-related cases currently lining up in the Competition Appeal Tribunal making allegations against multinational tech companies, including my own claim against the UK Google Play Store.

A number of these claims have very similar group claims being brought in other jurisdictions like Australia, Italy and the US. Not many have reached court-approved consumer settlements but some could do very soon. 

One claim at an early stage in the UK, but which has already settled elsewhere, is the Apple ‘Batterygate’ case. The company is accused of selling some models of iPhones with defective batteries that reduced performance and led consumers to replace phones sooner than they would like. Justin Gutmann has bought a £768m case on behalf of 23.8 million UK consumers

In the US, Apple agreed in 2020 to settle the same allegations and will pay out £92.9 million – up to £74 each – to US consumers. Chilean owners of the affected Apple models were offered a maximum of £41 per device as part of a settlement in 2021. But in Italy, the class action was withdrawn after Apple won a court decision in its favour. Consumers in Spain and Belgium where collective proceedings are also progressing are yet to see success. 

We’ve yet to see how the company will approach the case with UK consumers who owned the same phone with the same issue as their US counterparts. Will they face years of waiting only to go without the compensation awarded to others? Or will companies recognise it’s time to stop delaying and compensate consumers wherever they are in the world? 

Global companies should deliver global fairness

Fighting cases on a country-by-country basis stops people getting the redress they deserve and effectively creates a nation state ‘postcode lottery’ for access to consumer justice. 

Global firms create global problems for consumers. They should shift their focus and resources onto delivering global fair treatment and improving consumer products and experiences; rather than on costly, time consuming legal battles. 

Liz Coll is the class representative for the Google Play Store claim and founder of Connected Consumers, a consultancy that works across industries to help consumers get the best from digital markets. She previously worked at Citizens Advice and Consumers International on consumer tech policy and advocacy.

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