Each year, the Consumer Disputes Committee, operating under the Consumer Protection and Technical Regulatory Authority (TTJA), receives nearly 4,000 complaints from dissatisfied consumers regarding companies registered in Estonia. Complaints can range from defective goods sold by businesses to services so substandard that consumers demand refunds.

According to the head of the committee's secretariat, Veiko Kopamees, most disputes are resolved through agreements or compromises between consumers and businesses without the committee needing to issue a decision. However, in about 1,000 cases annually, the committee determines whether the consumer or the trader is in the right.

The decisions made by the committee, however, are not legally binding for either party. Kopamees noted that each year there are approximately 200-300 instances where businesses fail to comply with unfavorable rulings against them. The Consumer Protection Authority publishes the names of non-compliant companies in a "blacklist" available on its website.

This list currently includes businesses such as Seegi Mööbel, Pere Mööbel and the Gigant furniture store. Other companies listed include car dismantling service Carway, travel agency Mainedd, telecommunications company Levikom and fireplace vendor Koltsi Kaminad.

At the start of the week, Minister of Economic Affairs Erkki Keldo (Reform) submitted a draft amendment to the Consumer Protection Act to the government, aimed at making the committee's work more effective and trustworthy.

Several months ago, the Ministry of Economic Affairs (MKM) had proposed significant reforms to the committee's operations, including making its decisions legally binding and enforceable by bailiffs. However, the ministry has now abandoned this plan, maintaining the current system where the committee's decisions are merely advisory for both consumers and traders.

Homeowners: Government engaging in replacement activity

The chairman of the Estonian Homeowners' Association, Andry Krass, who represents consumer interests, stated that the latest version of the draft legislation falls far short of consumer expectations.

"I don't see how this bill could improve the situation for consumers in any way. The Homeowners' Association supported the initial version of the draft, but at that time, it was fundamentally different – essentially the complete opposite – and was designed with consumers' interests in mind," Krass said.

Krass argued that the logic behind the Consumer Disputes Committee should resemble that of the Labor Disputes Committee, whose decisions carry the same legal weight as court rulings. If either party is dissatisfied with the decision, they still have the option to appeal in court.

According to Krass, the main weakness of the Consumer Disputes Committee today is that many traders ignore decisions made against them because the rulings are only advisory. On average, it took the committee 56 days last year to resolve a single dispute.

"The problem lies with certain individual traders – though there are still far too many of them. The real question is how to proactively create a situation where consumers don't feel the need to turn to the Consumer Disputes Committee at all. For this to happen, the committee must gain significantly more authority," Krass explained.

Compulsory decisions might be illegal

Triinu Sillamaa, head of the business environment division at the Ministry of Economic Affairs, explained that the ministry abandoned the plan to make decisions legally enforceable because the state has yet to reach a firm conclusion on whether such out-of-court rulings would align with the Constitution.

"Legal scholars hold opposing views on this matter, and until this fundamental issue is resolved, it is unwise to introduce legal measures that could later face constitutional challenges," she said.

The Ministry of Economic Affairs has been considering amendments to the Consumer Protection Act since at least the fall of 2020, when a draft outline was sent to stakeholders prior to the preparation of the bill.

During that time, Sillamaa noted, the ministry examined whether such out-of-court dispute resolutions could be legally viable, but no definitive conclusion was reached.

The Ministry of Justice is now expected to produce a new legal analysis, likely in the first half of next year, according to a spokesperson for the Ministry of Justice. Despite this, the Ministry of Economic Affairs decided to move forward with the current draft of the bill and submit it to the government in its existing form.

"Since this bill also includes other measures to improve the work of the Consumer Disputes Committee, we decided to implement those changes immediately to enhance the committee's operations. Binding decisions can be pursued at a later stage," Sillamaa explained.

Ministry still hoping for a quality boost

Although the new draft bill maintains that decisions by the Consumer Disputes Committee will remain advisory for businesses, the Ministry of Economic Affairs aims to improve the committee's reliability and decision-making quality with the proposed changes.

Feedback from organizations such as the Retailers' Association and the Estonian Chamber of Commerce and Industry highlighted concerns about the varying quality of the committee's rulings as a reason against making them legally binding.

"The quality of the committee's decisions depends on the background and competence of its chairpersons. Some have judicial backgrounds, are competent and impartial, and their rulings are trusted. However, others create the impression that decisions are subjective, lack depth and almost always side with the consumer as the 'weaker party,'" noted the Retailers' Association.

To address these issues, the draft proposes creating three full-time chairperson positions, to be filled through a public competition for five-year terms. Currently, the committee has 14 part-time chairpersons serving under service contracts alongside their main jobs. By offering better compensation for these positions, the government expects the quality of the committee's decisions to improve.

Another proposed change extends the period during which the TTJA can list non-compliant businesses on its online blacklist from one year to three years.

Additionally, the bill introduces the option for parties to use mediation, where agreements certified by the committee would become legally enforceable for both consumers and businesses. Triinu Sillamaa provided an example: a consumer might have a €500 claim against a business, but during mediation, they agree that the business will pay €300.

"This seems redundant. If both parties agree to a compromise, why would either side escalate the matter to a bailiff? Both already want to resolve the dispute amicably," said Andry Krass of the Homeowners' Association.

Nele Peil, the managing director of the Retailers' Association, also expressed doubts about the necessity of mediation, noting that businesses remain hesitant about its potential value.

Traders also doubt the bill's necessity

From the consumer perspective, the new Consumer Protection Act does little to improve the situation, but merchants also have their reservations.

"We are questioning the overall purpose of this bill – what problem it ultimately aims to solve and whether this is the best way to address those issues," said Nele Peil.

Peil noted that for merchants, the most significant changes revolve around better compensation for Consumer Disputes Committee chairpersons and making their roles permanent. However, this is not seen as a transformative reform, and it remains unclear whether the quality of the committee's decisions will improve as a result.

She acknowledged that the current system for resolving disputes between consumers and businesses in Estonia is not functioning optimally.

"The question is whether today's imperfect system is better than what the future might bring. If the future system is worse, then we'd prefer to stick with the current situation. It's better to have something slightly flawed than something much worse. If someone can come up with a significantly better system that isn't overly expensive, we would certainly support it," Peil said.

Unlike the Homeowners' Association, which represents consumers, merchants are satisfied that the draft no longer includes plans to make the committee's decisions legally binding.

"Not only industry representatives but also the Supreme Court and the Ministry of Justice have made it clear that, under the Constitution, only courts have the authority to administer justice. A single consumer protection official cannot fulfill this role. The Supreme Court has also emphasized the principle of separation of powers in rule-of-law countries, which means the executive branch cannot act as the judiciary. While in the Soviet era the executive branch could administer justice, in a normal democracy, this is not acceptable because it concentrates too much power in one branch. It is vital that both individuals and businesses have legal safeguards against such potential overreach. We share this view," Peil explained.

Peil also expressed skepticism about the effectiveness of the TTJA's blacklist in its current form. She argued that consumers are more likely to rely on online searches or reviews to determine a business's reliability.

"I would recommend that the Consumer Protection Authority consider more modern solutions. For example, they could brainstorm ways to bring the blacklist into the channels where consumers are actually active," she said.

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