When It Comes to Class Action Suits in Israel, Consumer Watchdogs Are More Like Poodles

Few of the organizations authorized to represent consumers make use of the right.

Kav LaOved staff visit foreign workers from Thailand, July 23, 2016.
Nir Keidar

They are supposed to help ordinary consumers wage battle against big companies, but the nonprofit organizations authorized to help the little guy via class action lawsuits, petitions to the Antitrust Authority and the courts are more like poodles that watchdogs.

Information obtained by TheMarker and Hatzlacha – The Movement for the Promotion of a Fair Society and Economy found that among scores of organizations that applied for the status to represent consumers, only 11 were approved. And of those 11, only a few actually used their special status the last three years.

Moreover, the Justice Ministry, which approves groups for the special status, admitted it did very little to ensure those groups were acting.

Under a directive issued by the attorney general, the ministry is entitled to grant groups a special status in front of the courts and regulatory authorities as representatives of the general public. That includes the right to file lawsuits or friend-of-the-court briefs. The authorizations are given for three years after an application is reviewed by a joint team from the Justice and Economy Ministries.

Of the 11 approved organizations, for example, Kav LaOved has participated in just three class actions lawsuits since it was granted the special status four years ago. The Movement for Quality Government in Israel has filed no suits, nor has the group Transport Today & Tomorrow or the Histadrut [labor federation] Consumer Authority.

Only two of the 11 have been active. One is Hatzlacha itself, which has filed two class action suits on behalf of consumers, two petitions with the Israel Securities Authority and three with the Antitrust Authority since it was approved to do so a year ago.

The only other active organization is the Israel Consumer Council, which has filed eight class action suits and eight friend-of-the-court briefs. However, that covers the period going back to 2010; the council is also fortunate to have an annual budget of more than 10 million shekels ($2.6 million) and a staff of 50.

Many of the organizations do a lot more than file lawsuits and petition to regulatory agencies and often don’t need to go to court to achieve their goals. For instance, the Association of the Deaf in Israel, which advocates access for deaf people, said it rarely needs to go to court.

“When the organization encounters discrimination or lack of access, it sends warning letters through its counsel that make it clear that if the problem isn’t solved we will file a lawsuit. Usually, the letters are enough to achieve the goal,” the association said.

Orfa Levy, a legal adviser to Emun Hatzibur, a nonprofit that doesn’t enjoy the special status, said nonprofit groups that want to help level the playing field for consumers fighting big organizations are often handicapped themselves.

“It’s very important that nonprofits are involved, especially vis-a-vis big businesses and the authorities. The problem is the process – for them to take part in the relevant legal proceedings in their areas,” she said.

Michael Bach, an attorney who specializes in class action lawsuits, said the problem is that the law had been amended more recently to allow any organization to file a class action suit. “In the same vein, every organization should be allowed to represent consumers. The minute everyone is authorized, rather than just an exclusive club, everything will be better,” he said.

The Justice Ministry said the organizations granted the status were supposed to file an annual report on their activities, but admitted that it had never received any.