Mass claims are increasingly making the news. Just last week, a claim foundation went to court due to high transaction fees at Visa and Mastercard. However, the chance of success is still unknown: procedures often take a long time.
Booking.com also suffered in early July. The Consumers’ Association announced a collective claim against the platform, due to, among other things, fake discounts, fabricated scarcity, and artificially high prices. A mass claim was recently announced against six major energy suppliers due to unclear price increases in variable energy contracts.
Such a mass claim is useful for consumers because it often involves ‘scattered damage,’ explains Evelyn Tjon-En-Fa, who specializes as a lawyer in mass claims. “It often involves a low amount per claim. It is almost never worth it for a private individual to litigate on their own.” That is too expensive for one person. “The damage is perhaps a few tens of euros, then you still have to pay the process costs and a lawyer or another specialized lawyer.”
The foundation that started the mass claim must still be able to demonstrate to the court that it is really good for the consumer to litigate. To make a mass claim succeed, enough people must join, says Branda Katan, Professor of Corporate Law at Leiden University.
“A lot of money and time goes into such a case. Therefore, the court must be sure that someone is waiting for this claim.” If enough people have joined, it is clear to the court that this is the case. Otherwise, there is a high chance that it will not go through.
As a person, you can also register for the claim after the court’s decision. “That naturally does not put much pressure on the people who hope to receive compensation. People may think: I’ll do nothing now, but wait for the verdict,” says Katan.
‘For companies, a claim is quite clear’
A mass claim can also work out relatively well for companies, thinks Tjon-En-Fa. “With a mass claim, all claims come in at once. If everyone starts litigating separately, a company may face a lot of negative publicity. And defending against thousands of individual claims is a lot of work.”
A mass claim is therefore quite clear, says the lawyer. “If there is something in the claim, agreements can be made with the claim foundations about settlement: for this type of consumers with this damage, we agree on this fixed amount, etc.”
Tjon-En-Fa: “The Netherlands is at the forefront in the field of legislation on mass claims, we go further than the European minimum requirements.” That makes collective actions easier, but companies are not always waiting for that. “It also increases the risk of unnecessary lawsuits.”
According to Tjon-En-Fa, a good balance is therefore needed: “It is good that we facilitate mass claims, but we must also ensure that no unnecessary tax money goes to cases that do not have sufficient substance.”
Chance of success
Whether the claims really have a chance of success is still questionable. “The companies in question often also have good defenses,” says Tjon-En-Fa. “In addition, the procedures often take a long time. You should definitely not be in a hurry if you join such a claim.”
Because the Dutch legislation on mass claims is still quite new – the Mass Damage Settlement in Collective Action Act has only existed since 2020 – there is little to say about the chance of success: a very large number of these types of cases are still in what Tjon-En-Fa calls the “procedural preliminary phase.” “So how it works out in practice remains to be seen.”
This creates uncertainty about the settlement. Those who have joined the mass claim often pay nothing in advance. A financier bears the costs; they hope to get a share of the profit after a judgment. But who pays that financier is still questionable, says Katan.
“The people who have joined sign for a contribution to that financier. But what if you only register after the verdict? Do you also have to pay then?”, Katan wonders. “I would think not. But that seems unfair. The opinion among lawyers is divided.”