{"id":453,"date":"2019-03-27T11:25:03","date_gmt":"2019-03-27T11:25:03","guid":{"rendered":""},"modified":"2019-06-11T09:41:58","modified_gmt":"2019-06-11T09:41:58","slug":"developments-online-consumer-disputes-2635","status":"publish","type":"post","link":"https:\/\/www.lawteacher.net\/free-law-essays\/technology-law\/developments-online-consumer-disputes-2635.php","title":{"rendered":"Legal and Technical Developments in Online Consumer Disputes"},"content":{"rendered":"

Critically evaluate the current legal and technical
\ndevelopments relating to consumer online dispute resolution from a European
\nperspective<\/h4>\n

Introduction<\/h2>\n

Nowadays with improvement of technology and globalization of using
\ninternet, it can be observed many disputations from internet commerce are
\nincreasing. Numerous websites have been established due to finding a solution to
\ndetoxify these internet disputes, as well as to facilitate the resolution of
\ndisputes that may occure offline. The explosive expansion of the use of the
\nInternet makes it possible for businesses to expand their markets and render
\nservices to large groups of e-consumers. While off-line transactions could have
\nits own problems and disputes, it is the same for online transactions as well.
\nIn the other hand: e-commerce transactions will sometimes result in e-disputes.
\nTo ensure that all parties concerned will feel they can safely participate in
\ne-commerce transactions it is imperative that e-disputes are resolved
\nadequately, because uncertainty over the legal framework may inhibit both
\nconsumers from purchasing products or services over the Internet, and companies
\nfrom entering into the electronic market place.1<\/sup> <\/p>\n

Online dispute resolution (hereinafter\u2014ODR) is a branch of dispute
\nresolution which uses technology to facilitate the resolution of disputes
\nbetween parties. It primarily involves negotiation, mediation or arbitration,
\nor a combination of all three. There are many different types of ODR which are
\nbased on more traditional forms of alternative dispute resolution
\n(hereinafter\u2014ADR). Nevertheless, ODR can also supplement these traditional
\nmeans of resolving disputes by applying innovative techniques and online
\ntechnologies to the process. <\/p>\n

ODR is a wide field, which may be applied to a range of
\ndisputes; from interpersonal disputes including consumer to consumer disputes
\n(C2C) or marital separation; to court disputes and interstate conflicts.2<\/sup> It is believed that efficient mechanisms to
\nresolve online disputes will impact in the development of e-commerce. While the
\napplication of ODR is not limited to disputes arising out of business to
\nconsumer (B2C) online transactions, it seems to be particularly apt for these
\ndisputes, since it is logical to use the same medium (the internet) for the
\nresolution of e-commerce disputes when parties are frequently located far from
\none another.3<\/sup><\/p>\n

This paper examines the ODR from European perspective and discusses effective development of ODR deployments to handle online, offline, national and cross-border disputes in Europe. For this purpose, first defining the scope of ODR and reviewing existing services then continue by analyzing the major challenges that ODR faced in Europe and lastly conclude by suggesting some future scenarios.<\/p>\n

1. What Is Online Dispute Resolution?<\/h2>\n

Online
\nDispute Resolution (ODR) is generally described as “dispute settlement
\nwhich may or may not involve a binding decision being made by a third party,
\nimplying the use of online technologies to facilitate the resolution of
\ndisputes between the parties”‘ and it is described as an enormous
\nchallenge in the field of solving online disputes.4<\/sup> Hornle defines
\nODR as “dispute resolution carried out by combining the information
\nprocessing powers of computers with the networked communication facilities of
\nthe Internet.5<\/sup> The potential to use online settlement was predicted
\nby many experts,6<\/sup> however the major reason why it has not reached
\nthe exceptions so far is seen particularly in four aspects. The lack of awareness
\nof such solution and often complex accessibility is the first obstacle.
\nConsumers oftentimes do not know about ODR solution and they do not know what
\nto expect from it, which reduction their confidence in ODR services. The<\/p>\n

 Second barrier is the pricey dilemma to extend, specific ODR software to offer full potential of user-friendly and impressive solution. Another problem is seen in the lack of legal standards which would intensify the situation of ODR as convenient tool to solve consumer disputes in European Union.7<\/sup>   The last reason can be seen in,lack of motivation of the parties to take part in ODR  process mainly from the traders”.<\/p>\n

European
\nUnion was however confident to promote the potential of ODR almost from the
\nbeginning of its existence when it incorporated the requirement “<\/em>to
\namend any legislation which is liable to hamper the use of schemes for the
\nout-of-court settlement of disputes through electronic channels“<\/em>8<\/sup>
\nin E-Commerce Directive. After valuable experience with ECODIR9<\/sup> or
\nECC-Net, the European Commission introduced recent legislative framework to
\nsolve disputes out-of-court the ODR Regulation and the ADR Directive.<\/p>\n

2. ODR in the European Union<\/h2>\n

In 1999 the OECD has published
\n\u201cGuidelines for Consumer Protection in the Context of Electronic Commerce.\u201d10<\/sup> These guidelines raises the sense of cooperation between businesses,
\nconsumer representatives and governments to work together for providing
\nconsumers meaningful access to fair and timely alternative dispute resolution
\nand compensate , without considering superfluous costs or responsibility. One
\nof eye catching point is cross-border transactions. Special concentration is on
\nusing innovative of information technologies in implementing ADR systems.11<\/sup> <\/p>\n

The EU has addressed this issue in
\nthe European \u201cDirective on electronic commerce\u201d (98\/0325 (COD)).12<\/sup> The first part of article 17 of the directive states: \u201cMember
\nStates shall ensure that, in the event of disagreement between an Information
\nSociety service provider and the recipient of the service, their legislation does
\nnot hamper the use of out-of-court schemes, available under national law, for
\ndispute settlement, \u2018including appropriate electronic means\u2019\u201d. <\/em>In March
\nof 2000 an EU Workshop on out-of-court dispute settlement systems for
\ne-commerce was held in Brussels. This resulted in a report that also addresses
\nonline variants of dispute settlement in an e-commerce environment.13<\/sup> <\/p>\n

Recently the European Commission is
\nincreasingly active on ODR. The advancement of ODR has been contained among the
\nactions of the European Commission\u2019s Digital Agenda. On page 13 of this Agenda, it is mentioned: \u201cExplore by 2011, via
\na Green Paper, initiatives on consumer Alternative Dispute Resolution in the EU
\nwith a view to making proposals for an EU-wide Online Dispute Resolution system
\nfor e-Commerce transactions by 2012.\u201d In a similar way , in the European
\nCommission\u2019s work program  it is
\nmentioned that one of the tasks of the European Commission is to \u201cdevelop an EU
\nwide strategy to improve ADR systems and propose an EU wide online redress tool
\nfor e-commerce transactions by 2012 to improve access to justice online.\u201d<\/p>\n

Due to  globalization of internet and in parallel
\ne-commerce which is being more global day by day. It would be very difficult to
\nfind the necessities of the key players (i.e. businesses and consumers, for
\ncheap and efficient multi-lingual cross-border ODR, easy to use by businesses
\nand consumers and encouraging global cross-border commerce) if the ODR system
\nis built as only European, only Asian or American only.<\/p>\n

Multi-lingual EU with its long
\ntradition of ADR\/ODR and affirmative network of national consumer organizations
\nand identified ADR\/ODR providers can actively contribute to the establishment
\nof the global ODR system.<\/p>\n

 The
\nmajority of multilingual ODR projects are funded by the European Union. Ccform,
\nfor example, as of July 2005, facilitates online resolution of standard
\nconsumer complaints in all the official languages of the \u201cold\u201d European Union.
\nAlthough providing translation into less common languages is cost-consuming, it
\nseems important for sparking wider interest in ODR.<\/p>\n

2.1. Online Dispute Resolution in EU Member States <\/h3>\n

this essay try to clarify how many and what type of alternative
\ndispute resolution systems exist in EU Member States. From responses to the
\npresented questionnaire, we can state that in 12 European Union Member States:
\nSweden, Slovenia, Czech Republic, Luxemburg Romania, Norway, Slovakia, Ireland,
\nLatvia, Belgium, Cyprus and Lithuania, there is no such option for online
\ndispute resolution or ODR system. However Germany, Italy, Austria and Netherlands
\nhave and use alternative consumer disputes resolution systems online and they
\nuse them effectively and very successfully.<\/p>\n

Germany<\/em><\/strong>.<\/strong>
\nFor example, in Germany using such system are exclusively settled just
\ne-commerce nature.14<\/sup> It  is
\ndealing with e-commerce cases where the trader or the consumer is based in
\nBaden-W\u00fcrttemberg (region in the South-West of Germany). Since 18 June 2009
\ni.e. date when this system was launched and started to operate till 31 December
\n2010,442 cases were registered. 60,19% of all these cases were so called
\n\u201cinternal\u201c cases i.e. when consumer and trader live in the Federal Republic of
\nGermany and only 39,81% of all received claims and disputes were of the cross
\nborder nature when one of the relevant persons (consumer or trader) lived and
\nacted both in Germany and in another EU Member State. Usually such cases were
\ntransmitted from the European Consumer Centre in Germany.15 <\/sup>Even 72,
\n66% of all cases were settled in this system very successfully. Usually the
\nvalue of the claim varies from 50 to 100 Euros, but in some cases there are and
\nsome extremely interesting cases when the consumer applied and for 2,4 Euros
\ndamage. The maximum value of the claim registered in the ODR system was 3399
\nEuros. It is less time consuming method, because the average term for the
\ndispute settlement is 49 days.<\/p>\n

Italy<\/em><\/strong>.<\/strong>
\nItalian alternative dispute resolution system online is available even in 24
\ndifferent languages as well and in Lithuanian.16<\/sup> This system has been created by the Chamber of
\nArbitration of Milan. It is designed for the settlement of disputes between
\nclients and (or) companies in their trade conflicts, giving the priority to the
\nclaims related to the internet and e-commerce. Disputes can be solved
\nindependently from the nationality of the dispute\u2019s parties or value of the
\ndispute object value. The mediator or councillor in majority of cases does not
\nhave to decide who is right and who is wrong. He or she simply helps, assists
\nthe dispute parties to find the common agreement and works with them in order
\nto seek and find the contract between these persons.<\/p>\n

There are also many other issues that must be
\nconsidered before an ODR system can be successful. Just a few of these issues
\ninclude:<\/p>\n

\u2022 Building Trust<\/strong>. One of the necessities for ODR to become
\nmore successful is trust. Users of such systems should have enough trust in
\nthis new online environment. Much research is required to investigate how best
\nto create trust in this new environment.17<\/sup>   one way
\nis to develop a system of trust marks or seals. For instance, in Japan the
\nDirect Marketing Association and Japan Chamber of Commerce and Industry have
\ndeveloped the \u2018Online Shopping Trustmark\u2019 to provide information about reliable
\nonline marketers. The scheme also includes a complaint handling programme. In
\nmy opinion other countries especially in European union can use strategy
\nof  japan for raising their users trust
\n.Some of  reasons which reduction success
\nrate of ODR is: distrust in the technology, preference for face-to-face, access
\nproblems, technical phobia, 
\nunfamiliarity with the technology, mistrust of advisers such as lawyers.<\/p>\n

\u2022 Intellectual Property and Telecommunications Law<\/strong>.
\nODR systems often involve the development of software. This in turn raises many
\nintellectual property issues. For example, if an ODR provider invents a new
\nonline dispute resolution business process, it may be capable of being
\nprotected by a business method patent. Other issues concern domain names and
\nuse of trademarks in an online environment. Also relevant are all the issues
\nsurrounding copyright and operation of a website, including linking to other
\nsites and related issues.<\/p>\n

\u2022 Validity of Online Contracts.<\/strong> Other legal issues arise from doubts about
\nthe validity of online contracts. For example, in some jurisdictions any clause
\nmandating the use of a particular method of dispute resolution or forum
\nselection, must be in \u2018writing\u2019; and an online agreement may not meet such a
\nrequirement.<\/p>\n

\u2022 Access<\/strong>. Although ODR increased accessibility to
\nremote regions and to those who are home- bound, but, meanwhile, there is a
\nconcern about an emerging digital divide between those who    have access to ODR and those who do not.
\nBarriers could be financial, educational, cultural, age,  physical disability, language or simply a
\nphobia in using information technology.<\/p>\n

\u2022 <\/strong>Fairness<\/strong>. The online medium may require further
\nthought about input processes, assessment of adaptability, need for counselling
\nabout dispute resolution processes, some issues like imbalances and unfamiliarity
\nin IT literacy. It is vital that companies work together with stakeholders to
\nmake sure that online processes are fair and impartial. While Courts are
\nusually perceived as impartial, when a firm such as eBay offers an online
\ndispute resolution service, it is likely to perceived differently. Another
\nelement of fairness is transparency. The rules of operation and nature of the
\nODR process should be explained to the parties so that they know what to expect
\nand those expectations are met. Some feel that transparency also requires an
\nup-front and public disclosure of the ADR provider\u2019s track record.<\/p>\n

\u2022 Online Communication as a Male Domain?<\/strong> Another area where much more research is
\nrequired is the nature of online communication itself. It is obviously clear
\nthat there are differences between online and interpersonal communication where
\nthe parties are physically present. There is some evidence emerging that
\nInternet communications may be more confrontational and that a more masculine
\nstyle of communication dominates. It seems to be a more male-dominated medium.
\nAt the same time, dealing with another person from a distance, for example
\nthough text, may be far less intimidating than being physically present in the
\nsame room. There is also some age bias in an online environment, for example ,
\nyounger people, who have grown up with the technology are more likely to use
\nit.<\/p>\n

\u2022 Lack of in-person interaction. <\/strong>considered the most
\nsignificant disadvantage of ODR by many commentators, may also prove to be an
\nadvantage in certain circumstances. Lodder and Zeleznikow argued that it can
\nhappen for disputes in which the emotional involvement of the parties is so
\nhigh that it is preferable that they do not see each other.18<\/sup> Arguably,
\nthe \u201cimpersonal\u201d nature of online communications could help the parties to be
\nbetter able to distinguish between the person and the conflict (as is suggested
\nin principled negotiation19<\/sup>). In addition, many participants of
\n\u201cone-shot transactions\u201d do not want to enter into a closer relationship with
\nthe other party, or even wish to remain anonymous (hidden under an online \u201cnick
\nname\u201d or other kinds of pseudonyms). As noted by Hang, \u201canonymity is highly
\nvalued over the Internet\u201d, and ODR may preserve anonymity and resolve the
\ndispute at the same time.20<\/sup><\/p>\n

The European Union gave a lead by establishing
\nsuch initiatives as European Extra-Judicial Network for cross-border dispute
\nresolution (EEJ-NET)2<\/sup>[1]<\/sup><\/a>, an ADR\/ODR general clearing house, and its financial counterpart FIN-NET22<\/sup>,
\nwhich deals with financial disputes. Two recent EU-funded ODR projects are
\nCCform23<\/sup>, launched in early 2004, and Electronic Consumer Dispute
\nResolution (ECODIR) providing a mechanism similar to SquareTrade24<\/sup>,
\nyet on a pilot basis and free of charge for both business and consumers.<\/p>\n

And finally for reduction of some of those problems;<\/p>\n

The European Commission has also developed seven principles to which out-of-court Settlement schemes should adhere.  These principles include:<\/strong><\/p>\n

(1) Transparency: <\/strong>This requires that all details of the ODR
\nprocedure be made clear, including   coverage,
\ncosts, language, applicable law, nature of decisions dealt with, extent to
\nwhich decisions are binding, rights of appeal. <\/p>\n

(2) Consumer awareness and freedom: <\/strong>Consumers should have access to courts and no
\ndecision of the neutral party to an ODR process should be binding unless the
\nconsumer agrees to this in advance.<\/p>\n

(3) Impartiality<\/strong>: It is unclear what this may mean in
\nparticular instances. For example, does it require a completely neutral party
\nor one that is acceptable to both parties, even though that person may not be
\n\u2018neutral\u2019 in the strictest sense of the word.<\/p>\n

(4) Adversarial procedure<\/strong>: In essence, this principle requires that parties have the right to                   present their case.<\/p>\n

(5) Representation:<\/strong> Right of a party to be represented or supported by a third party<\/p>\n

(6) Legality:<\/strong> Consumers cannot contract away protection that is mandated by legislation.<\/p>\n

(7) Efficiency and accessibility: <\/strong>ODR services should be accessible at either no or low cost.<\/p>\n

Conclusion<\/h2>\n

It is safe to conclude from the preceding pages that Europe has played a major role to date in the development of ODR, starting with the emergence of the first entrepreneurial launches\u2013 chiefly with private blind biddings sites \u2013 and, on the institutional side, with the launch of the International Forum on ODR, the annual event providing a privileged space for the emergence of a heterogeneous, international ODR
\ncommunity.<\/p>\n

The EU public funding initiatives have also constituted a major driver for the development of ODR. A case in point is ECODIR, a service which has been in
\nplace for a decade now.<\/p>\n

However, some other projects ended with no conclusive results in terms of prototypes or proofs of concept. In this line, some lessons could be also extracted at this point on how to adequately fill the gap between initial prototypes \u2013 raising high expectations \u2013 and the effective provision of ODR services to customers.<\/p>\n

One minor, but nevertheless helpful lesson that comes out of the European experience over the first ten years of the 21st century is the need for some pan-European co-ordination of all those involved in the development of ODR.<\/p>\n

for the reasons set out in this paper, that not only has Europe made a substantial contribution in the past to ODR, but will continue to do so at an increasing pace in the future.<\/p>\n

BIBLOGRAPHY<\/h2>\n