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"peter j gray" japgray@email.msn.com To: HQ.DCMAIL3(ADR) Date: Tue, Mar 21, 2000 7:51 AM Subject: ADR for Consumer Transactions in the Borderless OnlineMarketplace Internet Consumers Organization March 21, 2000 Secretary Re: Alternative Dispute Resolution for Consumer Transactions in the Borderless Online Marketplace. Dear Secretary: On March 25, 1999, the Internet Consumers Organization (ICO) submitted comments to the FTC on "U.S. Perspectives on Consumer Protection in the Global Electronic Marketplace". We identified a series of consumer concerns with online transactions and offered some suggestions on ways to help resolve them. We also participated in the FTC workshop, which brought out the value of online ADR for consumer disputes. To follow -up, ICO now offers comments on online dispute resolution (ODR). We believe that ODR can provide consumers with a fair, cost-effective and rapid means to resolve problems that may arise between them and online businesses. What role does dispute resolution play in attracting or deterring consumers from purchasing products and services over the Internet? Research indicates that consumers are attracted to online shopping and purchasing by the wide choices of products and services available on the Internet, lower prices, greater convenience and speed of transactions. To many, these incentives appear to be greater than their concerns over privacy, security, fraudulent transactions and dispute resolution. Furthermore, consumers can reduce these concerns by dealing with reputable merchants and providers of services that they know and trust. While public opinion surveys indicate some concerns, there is little evidence to date that consumers have been deterred from shopping online by risks of financial losses. A rapidly growing number of consumers is using the Internet to comparison shop and buy a wide array of products and services. According to Media Metrix, which tracks online consumer usage, U.S. individuals aged 12 and over who accessed the Web weekly grew by 20% during the last year to 50.7 million as of March 5, 2000. Nonetheless, many consumers who comparison shop online still make purchases by phone, mail or in person. Despite the fact that consumers are not held liable for fraudulent online credit card transactions, many people remain uncomfortable with buying online. To attract reticent consumers, they must feel confident that the Internet is a safe and reliable way to transact business, and that disputes can be resolved rapidly and cost-effectively online. We believe that more consumer education is needed to make the public feel comfortable with online purchases. Both the private and government sectors have incentives to invest in consumer education efforts. Educated and aware consumers can benefit from using online dispute resolution (ODR) to rapidly and economically resolve disputes over billing refunds, late or undelivered merchandise, unauthorized transactions and other problems. To help educate the public, the FTC's brochure, "Resolving Consumer Disputes: Mediation and Arbitration" could be amended to inform consumers about ODR. Or, the FTC could develop a "Consumers' Guide to ODR" pamphlet along the following lines: "If you have a dispute with a merchant, service, creditor or other party that has not been resolved to your satisfaction, alternative dispute resolution (ADR) programs -arbitration or mediation - are faster, less expensive and more convenient methods of settling disputes than going to court. Today, both arbitration, where you agree to accept the decision of a neutral third party, and mediation, where you try to reach a mutual agreement to resolve the problem, usually involves a series of meetings or hearings, and requires filing paper statements and claims. This can be impractical and costly, particularly if your dispute involves a seller in another state or overseas. Online dispute resolution (ODR) allows consumer complaints to be settled rapidly, conveniently and at less cost than traditional ADR methods. For example, if you are dissatisfied with a product you purchased on the Internet from a merchant located anywhere in the world, the dispute can be settled online by a neutral third party. You would not have to attend hearings, hire a lawyer or appear in court. It is a common practice for merchants, financial institutions and providers of services to include ADR clauses in their contracts with consumers. Now, with the growth of Internet purchases, online dispute resolution (ODR) clauses are likely to become more prevalent. You should read the terms and conditions of ODR contract clauses before you purchase online." In summary, ODR offers the opportunity to increase consumers' confidence in using the Internet to purchase products and services. Consumer education and awareness of ODR will benefit the public, businesses and governments. Sincerely, Peter Gray, CC: FTC.SERIUS("brunette@internetconsumers.org") |