Online sellers in Europe are now required to provide a link to a new platform offering consumers Online Dispute Resolution (ODR) services.
The former director of online dispute resolution for eBay and PayPal Colin Rule hailed the move as evidence that ODR is emerging into the mainstream. Rule now helps companies implement ODR through the company he founded called Modria.
The European Commission’s online platform is designed to strengthen trust in online purchases, a major driver of the EU’s Digital Single Market strategy. If that strategy sounds familiar, it’s because we recently wrote about another aspect that impacts merchants: Purchases in Europe come with a 2-year guarantee, and a new proposal under the Digital Single Market initiative contains a provision that would force merchants to accept returns for faulty items for 2 years with tighter restrictions.
Commissioner Vera Jourova said in a press release this week about the new ODR platform, “One in three consumers experienced a problem when buying online in the past year. But a quarter of these consumers did not complain – mainly because they thought the procedure was too long or they were unlikely to get a solution. The new online platform will save time and money for consumers and traders. I am confident the platform will be widely used to solve consumer grievances.”
In a blog post about the issue this week, Modria’s Rule wrote, “Everyone who has seriously examined the challenge of cross-border consumer transaction problems has concluded that ODR is the only feasible option.” He predicted that by the end of the year, “universal consumer access to effective and efficient ODR will be conventional wisdom.”
We asked him a few questions about the new directive.
Who is actually providing the dispute resolution once the page goes live next month?
Colin Rule: The EU is relying on private dispute resolution service providers to opt into their scheme to provide the services. The EU is providing the form for consumers to report their issue, but private and non-profit ADR (Alternative Dispute Resolution) service providers will actually handle the cases. Member States are required to establish national lists of bodies offering ADR procedures (e.g. ADR bodies). All ADR bodies included in those lists will have to comply with binding quality requirements.
Who pays for ODR under the EU directive?
Colin Rule: The taxpayers of Europe will pay for the software that supports the process. Once the case is filed by the consumer and the merchant and consumer agree on which ADR body will handle the case, that ADR provider will charge any appropriate fee. In some cases, merchants may cover all the costs – or refund the buyer any cost they incurred if the ADR provider decides in the consumer’s favor.
How does this impact online sellers on marketplaces like eBay and Amazon?
Colin Rule: This regulation is only for merchants and consumers within the EU. Merchants who want to abide by the regulation should put a link on their websites or in their emails directing buyers to http://ec.europa.eu/odr. Merchants should be prepared to receive notifications from that EU ODR platform informing them that a consumer has reported an issue regarding a purchase to that platform. At launch, it appears there will be no penalties for not complying with this directive, but there may be penalties later imposed on a national or EU-wide basis, or on a marketplace-by-marketplace basis. Marketplaces like eBay and Amazon may start to include the links themselves on emails to consumers in order to be compliant.
Does this impact merchants based outside of the US?
Colin Rule: Yes, this regulation governs only merchants in the EU. But it is clear that other regions are considering similar moves, in order to ensure that their consumers will not be more vulnerable than consumers in the EU. It is a good idea for merchants to think about their resolution strategies and be proactive in offering ODR to their consumers, just to stay ahead of this development. With the UNCITRAL ODR Working Group wrapping up this summer, more developments on consumer ODR are sure to be revealed in the near future.
EcommerceBytes put the following questions to readers: should online sellers be forced to engage in online dispute resolution? And should online shoppers be forced to? Comment on the EcommerceBytes Blog.