Defective products: revamped rules to better protect consumers from damages | News

EU consumers will soon have easier access to compensation for damage caused by defective products. MEPs adopted revamped rules previously agreed on with EU governments on 14 December 2023, with 543 votes in favour, 6 against and 58 abstentions.

Easier compensation claims for victims

The updated directive simplifies burden of proof requirements for those claiming compensation and cancels the minimum damage threshold of 500 euro. While the claimant would normally have to prove that the product was defective and its faultiness caused the damage, now a court can presume it is defective, especially in the most technically and scientifically complex cases. The court can also order the business to disclose the “necessary and proportionate” evidence to help victims of damage with their compensation claims. The new rules also allow national consumer protection authorities to provide consumers with additional help.

Consumers will be able to get compensation not only for material damage, e.g. when their property was destroyed. They will also be able to claim compensation for non-material losses including medically recognised damage to psychological health. The new law also ensures that those suffering damage in the form of destroyed or corrupted data (e.g. when files are deleted from a hard drive) will also be eligible for compensation.

Extended liability for slow-to-show damage

According to the new directive, there must always be an EU-based business, such as a manufacturer, importer or their authorised representative, to be held liable for damage caused by defective products. It also applies to products bought online from outside the EU. To protect innovation, the new rules will not apply to open-source software, which is not part of commercial activity.

The liability period is extended to 25 years in exceptional cases when symptoms are slow to emerge. If the court proceeding was initiated within the liability period, the victim of damage will still be able to get compensation after this period.

Quotes

Following the plenary vote, the Legal Affairs Committee (JURI) co-rapporteur Pascal Arimont (EPP, BE) said: “The revised directive strikes a careful balance between being an effective instrument for victims of defective products, and providing legal certainty to economic operators in fast-changing markets. It ensures that defective software, apps and AI lead to liability, while protecting innovation among digital sector start-ups. This adaptation to digitalisation, the circular economy and global value chains makes the new legal framework future-proof.”

The Internal Market and Consumer Protection Committee (IMCO) co-rapporteur Vlad-Marius Botoş (Renew, RO) said: “The update of the Product Liability Directive was a necessary and welcomed initiative. The abundance of innovative products, new technologies, and new commercial relations are just a few of the issues that needed to be addressed. We were aiming to relieve the burden on victims of defective products, but also for clarity for economic operators and a European approach on the new products and technologies.”

Next steps

The directive will now have to be formally approved by the Council, too. It will enter into force on the twentieth day following its publication in the EU Official Journal. The new rules will apply to products placed on the market 24 months after entry into force of this directive.

Background

The existing rules on liability for defective products are almost 40 years old. The European Commission submitted its proposal for a significant update in September 2022, reflecting on the emergence of the new technologies such as AI, the increase in online shopping including from outside the EU and the EU’s ambition in building a circular economy. This legislation provides an additional layer of EU consumer protection on top of national liability regimes.