Alternative Dispute Resolution
The Mediation Information & Resource Center (MIRC) located at www.mediate.com respectfully submits the following information for consideration by the Federal Trade Commission and Department of Commerce regarding the implementation of online dispute resolution of consumer disputes.
This document contains responses to the 18 questions posed by the FTC and Department of Commerce in their February 9th Notice. These answers can also be found at a web site we have developed at www.mediate.com/ftc. On the web site answers are followed by "Resources" sections that list related and useful web links and articles. Visitors are also invited to offer their responses and opinions on the various FTC questions in a public forum environment. Because the answers presented in this document deal with matters constantly in flux, MIRC/OM will continue to maintain and update the content and resources available on the web site.
Existing Alternative Dispute Resolution Programs
1) What types of ADR are there? Are certain types better suited for online transactions?
ADR can be best understood as a spectrum of dispute resolution processes ranging from direct negotiation, where two parties attempt to reach an agreement by themselves, to arbitration and adjudication, where a decision is made by a judge or arbitrator.
Between these two extremes of no assistance and a third-party decision are several dispute resolution approaches, including:
There are also several hybrids of these processes, including med-arb, where a third party moves from being a mediator to being an arbitrator. Mediators may also utilize assisted negotiation techniques in their attempts to move a dispute toward resolution, and an arbitrator may require that disputants go through a mediation process before a binding arbitration process can begin.
Non-binding dispute resolution techniques, such as negotiation, assisted negotiation, and mediation, seem best suited for online transactions because they keep decision-making authority and responsibility for enforcement with the disputants. It is not necessary to establish what body of law governs the transaction, nor is it typically necessary to enforce the outcome. Because the disputants reach agreement that often calls for immediate implementation, it is usually not necessary for outside enforcement. To the extent that future implementation is called for, parties may memorialize their understanding in a binding contract and/or stipulate to such terms in court. To the extent that the court ratifies the parties understanding, the court's contempt power is available for enforcement.
5) Under what circumstances is ADR used to resolve disputes about consumer transactions today? How does ADR work in such cases? How are decisionmakers or mediators selected under an ADR program? What lessons can be taken from such a mechanism?
ADR is used in a wide variety of consumer disputes. Negotiation is obviously the most
common form of dispute resolution. Historically, most negotiation has been directly
between disputants, face-to-face or otherwise in real time (for example by phone),
unstructured and informal. With the rapid emergence of the Internet economy, negotiation
is now taking place online, often asynchronously, and increasingly within structured
negotiation environments. This is particularly true for businesses and industries that
generate or must resolve large numbers of disputes, such as the insurance, health care and
The way mediation commonly works in the court connected context is quite simple. Small claims mediators, often volunteers, attend hearings and sit on the side of the room. A judge or magistrate will look through the cases on the docket and recommend certain cases for mediation. If the parties agree to participate, they leave with the mediator and attempt to work out the dispute between themselves. If they succeed, the outcome becomes enforceable by the court, and it carries the same weight as if the judge had decided it. If they fail, the case is referred back to the judge and it is adjudicated as it would have been had mediation not been available. These mediation programs generally resolve between 70 and 90% of such disputes.
Arbitration has also become much more common in the last two decades. The arbitration industry has become a common part of doing business for many companies. The American Arbitration Association and JAMS are the two largest arbitration organizations, processing more than 150,000 cases per year in the United States.
Arbitration techniques range from a simple meeting with a third party to large and complicated private courts that empanel juries and employ retired judges. Mini-trials, summary jury trials, fact-finding, early neutral evaluation, and bracketed arbitration are all available as ways to resolve disputes. Parties can choose the options that they feel best fit their situation and their likelihood of resolution. When the amounts at issues are small, it is often better to prescribe a process as participants may have limited patience and ability to negotiate process issues. Whatever the amount at issue, it is critical that no single party has the ability to impose the dispute resolution process to be utilized on the other party(ies).
Mediators and arbitrators are usually required to meet basic training standards by the organizations that refer them disputes. For groups like the Academy of Family Mediators, this means a 40-hour approved training. For community mediation programs, training is often provided to mediators in-house. Larger ADR organizations often employ former judges or experienced attorneys to handle their disputes. Ethical Standards of Practice have been established by the major dispute resolution organizations (AAA, SPIDR, and the ABA) that dispute resolution professionals are expected to abide by.
Skilled mediators and arbitrators are crucial to the success of ADR programs. Experience in offline ADR has made clear that it is very difficult to delineate who is a skilled dispute resolution professional and who is not. Neither academic training nor professional experience have been shown to be directly correlated with skill in moving parties toward resolution. Dispute resolution also takes place in a wide variety of substantive contexts requiring different knowledge. As a result, uniform certification requirements for mediators or arbitrators have never been adopted.
6) What ADR programs currently exist for online consumer transactions? Do these programs address cross-border transactions? Please describe these programs and how they work. In describing the programs, please address issues such as fairness, effectiveness, affordability, accessibility, and due process concerns.
There are several different types of ADR programs currently available on the web. The most prominent are:
ClickNsettle at http://www.clicknsettle.com
Description and discussion with the different program designers is archived in the 2000 Cyberweek conference, found at http://webboard.mediate.com/~cyberweek.
There programs fall into several distinct categories:
Set System Processing: Blind Bidding
Cybersettle, CyberSolve, Clicknsettle and SettlementNow are websites that allow voluntary participants (often insurance companies and claimants) to submit financial offers for settlement without the offer being revealed to the other party. Offers are submitted over software that calculates whether the offers are within a designated range. The parties agree ahead of time that offers are within a designated range will be resolved by splitting the difference. When the offers remain too far apart, the software keeps the offers secret and other negotiations can continue without any of the offers being shared.
These systems are very simple and understandable. They are also limited and inflexible. Because these systems do not involve live mediators, they apply only to single variable conflicts, such as purely monetary disputes. In such contexts, these tools can be effective. Fairness is not a concern, because parties retain all decision making power, and the system is not weighted toward either disputant.
These resolution options have traditionally been aimed at lawyers and insurance companies. Rates are still quite high. Often a party is charged a smaller fee to use the system and then is charged a larger one if the dispute is actually resolved.
Open System Content Processing
Content based processes such as those at OnlineMediators at www.onlinemediators.com and Resolution Forum at www.resolutionforum.org use well organized case development and emailing processes for participants to convey their perspectives about the conflict. Email is certainly effective and convenient for purposes of conveying information, but can be weak in terms of being able to understand motivation and emotional content of communications. Online Mediators is committed to augmenting text based resolution processes with audio and video capacity as bandwidth continues to expand.
For the time being, the basic skills of communicating by email are critical for the mediator. Parties are more willing to participate in an email-based exchange than in a web-based one, where it is necessary to log into a web site repeatedly over an extended period. Email continues to be the mediator's best friend for purposes of framing and moving discussions forward.
Content based processes range from relatively simple intake forms to much more complex and detailed questionnaires (see Disputes.org at http://www.disputes.org). Online arbitration processes will likely pursue a similar model. The communication stages are predictable (process agreement, initial presentations, rebuttal(s), consideration, decision) and one can easily imagine that a good measure of arbitration will be carried out online. The challenge with online arbitration is that parties give up all due process rights to participate and not all may fully understand this. To the extent that one or more parties are disappointed with the imposed resolution, there may be substantial problems with implementation and enforcement.
The beauty of mediation is that parties retain decision-making power and do not agree, so there is nothing to resist or resent. Online mediation may be appropriately followed by online arbitration for those with this interest. It is recommended that online arbitration would not be offered by the same impartial that offers online mediation services. Otherwise, the mediation process itself becomes contaminated and parties will feel that they are at risk and need to persuade the mediator/arbitrator from the very beginning. An acceptable alternative is that participants may opt out of the process following the mediation component or at that time choose to substitute another decision-maker.
7) Does this ADR program provide information to a consumer before he or she is asked to agree to submit disputes to the program? At what point and how is this information provided?
Full disclosure is an important part of any mediation program. Disclosure needs to cover not only the process, but also the rights and obligations of the parties and the obligations of the mediator and any prior contacts between the impartial and the participants. Experience has shown that it is very important to talk through the dispute resolution process fully before it begins so that there are no surprises. The participants' process agreement should be reduced to writing so that there is a clear record and reference of this understanding.
Educating disputants about how ADR works is often one of the mediator's primary tasks. Most people are familiar with court adjudication and some parties come into the ADR arena expecting an imposed resolution. It is very important that parties understand the true nature of mediation: that they themselves will have to forge a resolution and that the third party has no decision making power.
Online ADR faces many challenges. Visitors to web sites usually want to jump right into the process offered on the site as opposed to spending time reading through preliminary information and instructions. Making information available on a site is different than providing full disclosure for participants. Sites must be designed so that parties have a clear understanding of what will be expected of them and what they can expect of the process, especially if they are paying to participate. Online mediators and arbitrators must also put real effort into clarifying client expectations before the process begins. Even when disputants are impatient to get to the "real" issues, it is imperative that these disclosures and discussions take place.
OnlineMediators (OM) makes these disclosures an integral part of the disputant experience. Information is presented clearly, and mediators are instructed to be up front with parties at the beginning of the mediation in explaining how the process works and what they can expect. No actions are taken without the knowledge of the disputants. Disputants retain decision-making authority throughout the OM process over both process and substantive issues, so there is no way that they can be railroaded by other parties or by a mediator. Our mediators have on average hundreds of mediations under their belts, so they are well aware of process alternatives, the importance of clear process understandings and of full disclosure.
8) What are the procedural effects of this program, for example, to what extent are decisions binding? To what extent are they appealable for a decision? Is participation in the program a prerequisite to filing a law suit?
The strength of mediation is that all decision-making authority rests with the parties. If both parties agree at the end of a mediation that they want the resolution they have crafted to be binding, they can have the mediator draft it in a formal way for them to sign or electronically confirm. Some mediators will draft the resolution in the form of a contract that each party can sign. Because both disputants participated in and agreed to the resolution, making it legally binding may be unnecessary.
Mediation also requires no appeal process because its enforcement comes from the willingness of the parties to abide by it. No appeal is necessary as no decision is made upon the parties.
Some jurisdictions have experimented with mandatory mediation and such programs have generally been successful. Studies have found that settlement, satisfaction and compliance rates for mandatory mediation is almost as high as voluntary mediation and there is much higher participation in mandatory programs. The key issue in "mandatory" programs is exactly what is required of participants: education about the process and alternatives or actual participation. Courts have clarified that flexibility, good faith and agreement can not be required. Hence, the strength of mediation is that nothing is imposed on parties which virtually eliminates enforcement and appeal issues. On the other hand, no resolution can be guaranteed, so there must be back up alternatives provided.
9) How are decisions enforced under this ADR program?
As mentioned above, mediation agreements are usually promptly implemented be that by a refund, additional payment, exchange of goods, credit or the like. In this sense, developing a formal legal agreement is often unnecessary. Parties may create a formal contract if future compliance is required, and such arrangements can include monitoring and review. If desired, administrative consent decrees and orders, or stipulated judicial orders, judgments and decrees may be stipulated, but all of this is usually unnecessary and somewhat inconsistent with the relative informality of the mediation process.
10) What are the costs to the parties engaging in ADR? Who funds these costs? Is this program cost-effective? Is it suitable for small-dollar transactions? Does this program handle a large volume of disputes? Is it capable of doing so?
In the OnlineMediators program, there are two ways that the process can be funded.
First, parties can simply pay the case processing fees themselves. Upon submission of a dispute, Online Mediators will explore whether each side is prepared to mediate at no cost. If both (all) parties are prepared to mediate, each party is expected to pay half of the total costs, which are scaled depending upon the dollar value of the dispute. Current rates for the services of an experienced Online Mediator range between $50-$100 per hour per party. These rates are somewhat lower than the hourly rates charged by professional mediators in their offline practices.
Second, an e-commerce site that generates a significant number of disputes (or any site that is willing to pay to provide dispute resolution services to its users) can enter into an Affiliate relationship with OnlineMediators. For a set fee, OM will mediate all the disputes generated by or referred by the e-commerce site. Under this model, disputants don't have to pay anything to utilize the mediation process.
The first model is not currently suitable to small-dollar transactions. Parties will likely not be willing to pay the case management fees if their dispute is over a dollar value less than $1,000. To make the mediation worth the mediator's time, there needs to be the promise of reasonable compensation.
The second model is suitable for small-dollar transactions. Because the relationship is institutional, the amount in dispute in the mediation becomes irrelevant; the parties are not paying for the mediation, and the mediator will be reasonably compensated regardless of the amount in question in the dispute.
OnlineMediators is designed to scale to this institutional level. This is the Online Mediators business model. With our current panel of over 400 experienced mediators, we can handle thousands of disputes a week. Should demand rise above this level, MIRC (Online Mediators sister site) at www.mediate.com now has an almost limitless pool of mediators that we can draw on to handle the increase. See MIRC's International Mediator Directory at www.mediate.com/mediator/search.cfm which now has nearly 4,000 registered mediators. To ensure consumer satisfaction, Online Mediators has initially empanelled only the most experienced and interested mediators from the MIRC Referral Program.
11) Is ADR for online consumer transactions better suited to certain situations than others, for example, cross-border disputes or cases limited to a certain monetary amount? Are there any other factors relevant to determining whether ADR is suited to particular online consumer transactions?
Online ADR is best suited to monetary and other disputes that occur online. If the dispute in question arose in the "real" world and face-to-face mediation is a viable option, then it is the preferable one. For complex multi-issue and relationship-based disputes (partnership dissolution, divorce mediation, etc.) face-to-face mediation is almost always preferable.
However, when the dispute at hand is focused on a single quantifiable issue (money being the most common), online ADR makes sense. In e-commerce transactions, there is rarely an ongoing personal relationship between the disputants. In fact, the parties may be separated by national boundaries, customs, and languages. In these circumstances, online ADR is an excellent fit. It can help to clarify the issues and to structure the proposals and counter proposals made by the parties.
Online ADR can also be a good fit in disputes that arise in online relationships. Flame wars in Usenet discussions, for example, may fit well with an online dispute resolution process, probably because the relationship developed in cyberspace, so it is the most logical environment in which to resolve it.
It is important to note that the hottest trend in e-commerce these days is Customer Relationship Management or CRM. Supporting the customer "relationship" with the e-business, from marketing to the actual transaction to post-sale support to another transaction, has been pinpointed as crucial for successful e-business. Online ADR is an integral part of this customer relationship, especially when a relationship goes awry. Building online dispute resolution into e-business CRM mechanisms provides a safety net under e-business transactions ensuring that no customer falls through the cracks.
12) Describe alternative dispute resolution programs for online consumer transactions that are being developed by businesses, consumer representatives or other groups.
There are several different types of ADR programs currently available on the web. The most prominent are:
ClickNsettle at http://www.clicknsettle.com
Description and discussion with the different program designers is archived in the 2000 Cyberweek conference, found at http://webboard.mediate.com/~cyberweek.
Individual e-commerce companies that frequently generate disputes may be developing internal dispute resolution capacity, but we are not aware of any examples. It is likely that these internal dispute resolution processes are very informal, and that their aim is more to process complaints than to achieve meaningful resolution.
13) What are the obstacles, if any, to the implementation of alternative dispute resolution programs for online consumer transactions? What are the incentives and disincentives for businesses and consumers to use such programs?
The primary obstacle to the implementation of online ADR is a lack of awareness and understanding on the part of the public. Consumers, businesses, and e-commerce sites need to be educated about ADR options that are available to them. However, in addition to informing the public about the availability of the services, public education should attempt to move people past the litigation-centered view of disputes to the broader notion that parties can work out their differences themselves. The greatest obstacle to widespread use of dispute resolution is the belief that the most effective way to resolve a dispute is to go to court. This belief is particularly strong in the United States. In truth, there is a myth of adjudicatory dispute resolution in the sense that only approximately 3% of all disputes that are filed in court actually end up being tried by a judge or jury. The vast majority of disputes filed in the courts and with administrative agencies are settled, with approximately half of such settlements occurring in the week immediately prior to the contested hearing (on the courthouse steps).
Our new Internet economy will challenge our adjudicatory dispute resolution assumptions. Some have gone as far as saying that the court system is nearly useless and irrelevant for disputes that arise online. There are strong incentives for businesses and consumers to use such programs, because the cost and delay involved in taking the dispute into offline channels are usually prohibitive. In most circumstances, the courts are irrelevant to online disputes. The only online redress options most people are aware of are:
In such an environment, the reasons for using online ADR are overwhelming. If online consumers were better aware of arbitration and mediation services online, they would definitely make use of them.
17) A variety of arrangements have been developed through international organizations and private sector bodies to facilitate ADR, particularly in a commercial global context. What lessons have been learned from these experiences that might contribute to better understanding of this area in the context of consumer online transactions?
International organizations have long relied on dispute resolution provisions. In a global context, where there is no established body of law nor authoritative court system, dispute resolution and conflict management have long been the primary channel for countries to work out their differences, particularly in the commercial context. Diplomats in particular have preferred the informality and flexibility of dispute resolution over more formal, legalistic mechanisms for resolving disputes.
The OSCE, for example, wrestled with the notion of a "Pacific Settlements of Disputes" (PSD) agreement for decades, but it was opposed by some major powers, notably the Soviet Union. Finally, the unification of Germany and conflicts in Eastern Europe generated the critical mass, and General Principle 5 (which calls for the peaceful settlement of disputes) and 6 (which specifies a wide range of DR techniques that can be used) were adopted. Principle 6-d even calls for the involvement of a non-binding third party when the solution requires one. While this language, and the language of the Valetta Mechanism, are explicit in making the case for dispute resolution, the mechanism has not been formally used since its adoption. The complexities of diplomacy make for a much more complex environment for conflict management and third party intervention.
In a commercial context, The World Trade Organization is probably the most ambitious international ADR experiment ever undertaken. The original GATT dispute resolution provisions (22-23) were non-legalistic, but in the 1950s and 1960s GATT moved closer to a judicial model. The improvements of 1989 brought in a more developed form of dispute resolution, authorizing binding arbitration, urging the use of third parties, and monitoring agreements.
The WTO process has been invoked more than 100 times in its first three years, with half of the cases resulting in a positive outcome for the complaining party. The process has remained flexible, even though the rules for how the system works are very specific. The primary observation to be drawn from the WTO's development is the constant struggle between those who prefer a legalistic, court-like process for resolving disputes (a litigation or arbitration model) versus those who prefer more of a conciliation model (negotiation or mediation). The WTO is now creating precedent from its resolutions, which makes it seem more like an adjudicative body, even though the Dispute Settlement Understanding (DSU) seems to prefer that countries to work out their disputes themselves. Improvements in the dispute resolution system include:
Many of these types of improvements will likely be built into online consumer dispute resolution mechanisms as well.
23) To what extent are mechanisms that have been designed to prevent disputes from arising in online consumer transactions, such as escrow accounts, being used in the online world? Are there legal or other obstacles to the development of these types of mechanisms?
Preventative mechanisms, such as escrow accounts and trusted intermediaries, are valuable dispute resolution tools. E-commerce sites do a lot of planning to try to minimize conflict that might arise in the course of transactions that occur on their sites. This dispute resolution "systems design" (as it is called by ADR professionals) is essential to improving processes and reducing conflict over time. Most ADR programs provide feedback to the organization they work with to identify problem areas and to work proactively to reduce conflict. Mediation programs can themselves be a powerful preventative mechanism if they are made available at an early enough stage that they can catch a dispute and resolve it before it flares into a major issue.
Utilization of these outside mechanisms to reduce the instance of conflict is still at a very low level. It is likely that they will grow in popularity and be integrated into the business practices of e-commerce sites in much the same way that online ADR will develop and be integrated. Legally, most of the obstacles to the development of these mechanisms will involve national jurisdiction, controls on the flow of money and goods (as in customs and taxes), and abuses of authority. The legal status of these third parties is still to be determined, and that status could significantly promote or hinder the availability of their services.
Elements of Fair and Effective Dispute Resolution Programs for Online Consumer Transactions
24) The OECD "Guidelines on Consumer Protection in the Context of Electronic Commerce" encourage businesses, consumer representatives and governments to "work together to continue to provide consumers with the option of alternative dispute resolution mechanisms that provide effective resolution of the dispute in a fair and timely manner and without undue cost of burden to the consumer." What are some steps that could be taken to implement this principle? How can issues such as those raised in questions 4 through 7 (above) be considered in this context?
The OECD's charge requires that businesses, consumer representatives, and governments first agree on what is meant by alternative dispute resolution mechanisms. The motivation of each of those groups is very different in providing online ADR. Businesses want to generate more profits by making consumers feel safer online, by keeping them satisfied with the online transaction environment, and by preserving the e-business' reputation as a good place to shop, all without having the system take too much time or money. They also want to shield themselves from litigation as well as keeping customer complaints from escalating into public embarrassments. Consumer representatives want effective redress options for customers, both to provide protection against fraud and to help resolve the inevitable problems that arise in the course of transactions. They also want to keep consumer costs down. Governments want to ensure that markets function smoothly (especially by avoiding undue burdens on emerging e-businesses), that disputes between buyers and sellers don't damage overall confidence in e-commerce, and that businesses engaging in criminal activity on the web can be separated from those businesses that are merely disorganized or inefficient.
Reconciling these different motivations is an important first step in providing effective alternative dispute resolution options online. No one wants the system to take too much time, too much effort, or too much money; everyone wants it to be effective, and they want to ensure that e-commerce continues to function smoothly.
Therefore, government should work to build agreement between consumer advocates and businesses on the need for online ADR and acceptable forms for it to take. Standards for e-businesses should include reference to dispute resolution mechanisms, either internal or external or both. ADR resources on the web should be publicized and referred to by both the government and consumer groups. Businesses should have the freedom to utilize dispute resolution mechanisms that best meet the needs of their clients and the types of transactions they engage in. Costs for online dispute resolution services should be kept reasonable and the systems should be designed to work as efficiently, quickly, and effectively as possible.
The government can utilize the consensus it facilitates between consumer groups and e-businesses to set standards for online ADR programs, regarding disclosure requirements, binding versus non-binding processes, enforcement of resolutions, and costs for ADR service provision. By clarifying the types of programs available and making this information available to e-businesses, the government will undoubtedly expand online consumer redress options without resorting to regulation of any kind.
Dispute resolution should be seen in its proper context: most consumers and businesses are not happy that they are involved in a dispute. They want the issue resolved quickly and effectively. In this respect, online ADR must be an efficient service that can be called on to resolve issues at an early stage in the transaction process to keep markets functioning smoothly. Working from this common purpose, government, businesses, and consumer groups can design the types of online ADR that best meet the OECD's standard.
25) What issues are raised or created for ADR, if any, by online consumer transactions that do not exist in the traditional, offline environment?
Online transactions have similar issues to those that exist in offline environments, but those issues are altered by aspects of online interaction that make them uniquely challenging.
In particular, relationship issues may be exaggerated online. If it is likely that you will not be making another transaction with the other disputant, you may be less interested in mediating in good faith, or more willing to misrepresent your position. It is easier to lie online and there is less social stigma associated with being caught. It is one thing to have a dispute with your local grocer. If you are rude, demanding, deceitful, or inflexible, you are likely in the future to travel across town (at increased cost and inconvenience) for your groceries. However, if you have a dispute with an online bookseller, it is no problem to travel across the country to deal with another seller, they are only a click away.
The likelihood of meeting those we trade with is decreasing. If you are going to see the person at a meeting, or on the street, or you have maintained and wish to continue a good working relationship, the demeanor in the mediation is different.
Flame wars occur because there is a lack of depth to the community, if there is a community at all. Mediation relies in large part on the strength of community. Online marketplaces that focus on creating communities of buyers and sellers will have fewer conflicts and the conflicts that do occur will be easier to resolve. Geography will be a significant factor in online consumer transactions, including jurisdictional issues, monetary differences, and where an "in the room" meeting might occur.
One area that may be unique is the varied level of technical expertise and capability. There is a significant variance in online skills, connect speeds, uptime, connection costs, and hardware availability and power which can impact a parties ability to negotiate. These differences in online ability and access issues will likely lessen with time.
Role of Governments
26) What should be the role of governments, if any, in connection with the use and/or development of alternative dispute resolution programs for online consumer transactions?
As explained in question 13, the government has several important roles to play in expanding and developing online dispute resolution programs:
In addition, the government should:
It is not clear that government regulation will be necessary in the area of online ADR. Should these mechanisms be abused (such as the addition of binding arbitration into purchase agreements to shield businesses from litigation), then the government may have to get involved to prevent such abuse. But it is more likely that the market will create innovative, efficient online ADR service providers and that the government will be able to gain the benefits of online consumer redress systems without passing a single regulation.
As evidenced by the FTC's database of tens of thousands of online complaints, government is a natural destination for consumers who feel that they were mistreated online. This position makes government a perfect source for information about non-judicial ways of resolving these complaints. By serving as a source of information and referrals to online ADR programs, government can improve the efficiency of e-commerce while at the same time bringing disputes to resolution and increasing the satisfaction of consumers with e-commerce.
32) What, if any, U.S. laws or international treaties to which the United States is a member, would have to be examined as potential barriers to implement effective alternative dispute resolution programs for online consumer transactions?
The offline relationship between ADR and the judicial system is well established in the United States as well as in many other parts of the world. There are many more risks involved with imposing U.S. jurisdiction in international e-commerce transactions than there are in encouraging the use of ADR. However, there may be national environments where the confidentiality or impartiality of the online ADR process is not protected. In those environments, it may be necessary to clarify the operating space available to mediators and arbitrators.
The European Commission is proposing the creation of an accreditation process for online dispute resolution firms that would set standards for operations within the European Union. The proposal would also give member states authority over the accreditation of companies based within their borders.
Such an accreditation process would likely facilitate the operation of online ADR firms in the EU, where each nation has different laws governing ADR. However, the administrative burden of certifying companies, ensuring continued adherence to standards, and negotiating different national legal systems may prove counterproductive to innovation in online ADR.
The United States must work with the European Commission to ensure that online ADR systems in North America and Western Europe can function smoothly together. Should the EU adopt standards for online ADR firms, the US should take steps to ensure that American ADR firms can continue to have access to European markets, and that they have the same freedom of operation European ADR firms enjoy.
33) What should be the primary focus and scope of the public workshop on alternative dispute resolution for online consumer transactions?
First, the workshop should bring a public spotlight onto several issues:
The workshop should partially serve as a media event, both to educate consumers about the availability and effectiveness of online dispute resolution resources and to build critical mass in the e-business community as to the importance of third party dispute resolution options.
Second, the workshop should begin the consensus building process between businesses and consumer groups on the issue of consumer redress and online ADR. E-business representatives and consumer representatives should present on the challenges they face in dealing with disputes in online transactions and the advantages of online resolution.
Third, the issue of standards for online ADR programs should be discussed. What potential for abuse exists in binding vs. non-binding programs? What disclosure should be required to participants up-front? How long should processes take and what should they cost? Beginning the discussion on these items will go a long way in improving the quality of ADR resources online.
Finally, the workshop should discuss the particular challenges of international online dispute resolution, focusing on the efforts of the EU to accredit online ADR companies. A strategy should be developed to collaborate with the EU in setting these standards so that US and European firms can practice on a level playing field.
38) Are there any other interests not previously described in this notice that should be represented at the workshop?
Some interests that might need to be considered: