Increasing number of class actions in Germany – an underestimated risk for many businesses

The German Consumer Rights Enforcement Act (Verbraucherrechtedurchsetzungsgesetz, VDuG) entered into force on 13 October 2023. It serves to implement the Collective Redress Directive ((EU) 2020/1828). Most importantly, it contains a new type of claim, the so-called “Abhilfeklage”. Within only six months, German consumer associations have filed such claims in six cases (possibly more that are not publicly known yet), the latest one being a claim by Verbraucherzentrale Bundesverband against DAZN concerning unilateral price increases that was filed in April 2024 (press release available here).

The “Abhilfeklage” is a representative action aimed at redress measures that can be brought by qualified entities (such as consumer associations) against businesses. It allows courts to hand down decisions ordering businesses to take certain actions (including the payment of monetary compensation) to a group of individual consumers, provided that they have suffered from the same type of wrongdoing, that their claims are essentially identical, and that they have registered to participate in such action.

Based on the number of “Abhilfeklagen” brought within a short period of time, this type of claim is likely to have a much bigger impact than the already (and still) existent so-called “Musterfeststellungsklage”. This is mainly because the new “Abhilfeklage” allows courts to order the defendant to take certain actions, including the payment of a compensation; in contrast, the “Musterfeststellungsklage” which has already existed prior to the new law only allows courts to make binding findings on specific aspects that are relevant for the consumers’ claims (which then would still have to file individual claims if the defendant refuses to compensate them).

Here are the key facts about the “Abhilfeklage”:

• Admissibility: Essentially identical consumer claims with at least 50 potentially affected consumers.

• Claims in scope: All civil law claims by consumers against businesses, e.g. payment claims resulting from inadmissible price adjustment clauses, claims to repair or replacement due to defective products, claims for damages based on misleading advertising, etc.

• Opt-in: Consumers must actively register their claims to the Verbandsklageregister (which is operated by the Federal Ministry of Justice) within not more than three weeks after the closing of the oral hearing.

• Eligible parties to join: Only consumers and very small SMEs (which have less than ten employees with not more than EUR 2 million annual turnover).

• Outcome of proceedings: If the parties do not settle the case (which requires approval from the court), the court can order the business to take certain actions; this includes the payment of a collective amount to a group of individual consumers (whereby the requirements for the individuals to obtain such payments will be specified), which will be distributed by a trustee amongst the consumers concerned.

The new “Abhilfeklage” poses a relevant (and largely unknown) risk for businesses, in particular regarding damage claims. While small damage claims are often not pursued by consumers in court, this might now change; consumer associations could bring corresponding claims and that could result in substantial damages payments (depending on the number of consumers concerned). The six actions that have been brought already indicate that this is not only a theoretical risk; consumer associations have started using this new tool on a regular basis. That affects the risk exposure for businesses, which should consider this relatively new risk in their decisions.

Information about the currently pending “Abhilfeklagen” is publicly available in the registry of the Federal Ministry of Justice. The full text of the VDuG is available here.