ODDA responds to Law Commission review of consumer class action

The ODDA has responded to the Law Commission’s initial scoping questionnaire on the possible introduction of a consumer class actions regime.

The Commission is exploring whether a new regime could improve consumers’ access to redress, particularly where individual losses are too small to pursue through the courts. The project is still at an early stage, with the Commission assessing the potential benefits and risks alongside existing enforcement and dispute resolution mechanisms.

We support effective consumer redress and believe that rogue operators who cause harm to consumers should be held to account. But we are concerned that introducing a new regime at this stage may be premature, particularly while businesses are still adapting to changes under the Digital Markets, Competition and Consumers Act (DMCCA).

Timing of further reform

The DMCCA is still relatively new, with further consumer protection requirements, including the new subscription contracts regime, yet to take effect.

We believe these rules should be given time to bed in before further changes are introduced. Adding a new class actions regime at this stage could create uncertainty for businesses working to comply with existing requirements, as well as a risk of overlapping regulatory action.

Impact on smaller platforms

Subscription services with large numbers of users and relatively low-value transactions could be particularly exposed to consumer class actions.

For smaller online dating platforms, defending a claim could involve significant legal costs, even where the claim has little merit. This may put pressure on businesses to settle rather than defend themselves in court, potentially reducing competition and consumer choice.

We have also highlighted the privacy and security risks that could arise if sensitive user information needs to be disclosed as part of class action proceedings.

Effective redress and safeguards

If a new regime is introduced, it should focus on ensuring consumers who have suffered genuine harm receive compensation, rather than creating unnecessary litigation costs.

In our response, we have called for safeguards against speculative claims, opportunities for businesses to resolve issues before legal proceedings begin, and measures to ensure compensation reaches affected consumers.

Any future regime should also take account of existing regulatory frameworks and avoid placing disproportionate burdens on businesses acting in good faith.

Read our full response here.