6. Alternative Dispute
Resolution
How to Avoid Disputes
Most
disputes are due to misunderstandings. Products
don’t meet expectations. Conditions are not
clear. The method of fulfilment is not what was
expected. Transparency and playing by the rules,
as well as monitoring customer behaviour and
collecting feedback can avoid these
misunderstandings. An extensive after-sales
service (see also 3. Contracts) can also go a
long way towards preventing problems.
Suggestion
Make
sure it is easy to get e-mail and telephone
contact information from your web site.
Virtually every web user has experienced the
frustration of trying to contact the owners of
a commercial web site, only to find nothing,
find a US based toll-free number or completely
irrelevant e-mail links such as “investor
relations”. If your customers are annoyed
already and have to spend a half-hour figuring
out how to contact you, they will be irate
when they actually make the complaint.
Of
course having a contact point for complaints
is not enough. It is critical that you respond
to complaints as quickly as possible. Ignoring
complaints is a great way to lose customers.
Acting quickly and surprising annoyed
customers with fast solutions, on the other
hand, is a great way to retain customers. And
remember: you need your customer’s loyalty.
If
complaints do arise, a clear and comprehensive
refund policy will help, particularly if it is
easily found at the time of ordering. Having a
clear complaints procedure together with contact
points for complaints is also critical (see box
below).
Checklist
You
will avoid disputes if you ensure the
following information is clearly stated and
readily available on your web site (include a
link on your main menu bar):
·
conditions and procedures for
exercising the right of withdrawal
·
information on after-sales services and
guarantees which exist
·
conditions for cancelling the contract
·
information on the way and the period
of performance of the contract
·
cancellation terms
·
order fulfilment
·
delivery times/costs
Different Types of Alternative Dispute
Resolution (ADR)
Of
course it is impossible to avoid disputes,
particularly in a new industry where the rules
are being established and on-line trading
provides opportunities for fraudulent,
misleading and unfair commercial conduct both in
B2B and B2C.
The
problems involved in seeking redress from
disputes over on-line transactions cannot be
underestimated. The costs and the delays
involved in litigation, particularly for
consumers and SMEs, can be prohibitive and soon
eclipse the value of the disputed product or
service. The problems are compounded when the
dispute is cross-border. The costs are higher,
the delays are longer, and the relevance and
effectiveness of the courts for resolving such
disputes, especially when the value of the
disputed product is low, is not obvious.
Uncertainty over the legal framework may not
only inhibit consumers from purchasing products
or services over the Internet, but also
discourage companies from entering into the
electronic market place.
Clearly,
a means of solving disputes which includes the
authority of the court but not the cost or
inconvenience would be welcomed. Fortunately, it
exists already. Alternative dispute resolution (ADR),
which relates to all types of dispute settlement
which are not litigated before a court, can
solve complaints quickly and cheaply through
arbitration or mediation by a trusted third
party. Consumers, SMEs and business benefit from
such systems by avoiding costly, time-consuming
lawsuits in a legally fragmented and uncertain
environment.
For
international B2C e-commerce, characterised by a
large volume of relatively low value
transactions carried out across borders, the
relevance and effectiveness of courts for
resolving problems may be limited. Here ADR will
likely prove to be the most popular and
appropriate solution.
Private,
public or non-profit organisations could all
offer ADR services. Consumer organisations,
trade and industry associations, public
administrations or other “neutral” organisations
may offer schemes through which out-of-court
dispute settlements of consumer complaints can
be dealt with. The most common ADR providers are
often referred to as ombudsmen or consumer
complaint boards.
Recent
initiatives, from the EU as well as at the
global level, aim to develop ADR systems in
order to create trust in e-commerce.
On May
5, 2000, the European Commission launched a
European Extra-Judicial Network for settling
consumer disputes out-of-court (EEJ-NET). The
European Network which will cover any consumer
dispute over goods or services, is expected to
reduce costs, formalities, time and obstacles in
cross-border disputes, thereby boosting consumer
confidence in electronic commerce.
Rather than to harmonise and create general
standards for out-of-court dispute resolution
schemes the main provision of the EEJ-NET (as
well as the FIN-NET, an out-of-court complaints
network for financial services) is to use the
existing national out-of-court dispute
resolution schemes and link them to national
bodies to provide a EU-wide complaints network.
The system is basically built on mutual
recognition between the national redress bodies
and exchange of information.
Under the EEJ NET, which provides central
contact points on national level (so called
‘clearing houses’) the consumer can receive
information and advice on how to get access to
an out-of-court dispute resolution scheme in the
supplier's country. Even if the supplier does
not belong to the out-of-court dispute
resolution scheme that operates in the
consumer’s country of residence, the consumer
can access the out-of-court redress.
To help the parties understand this schemes the
Commission has published a guide ‘Enforcing your
rights in the Single European Market’ which is
available through the ‘Dialogue with Citizens’
website at:
http://europa.eu.int/scadplus/citizens/en/inter.htm
Clearly,
it is very much in the market’s interest to
develop ADR systems to provide confidence for
business and consumers alike.
Case Study from the Near Future
Sylvia, who lives in Madrid, orders a set of
coffee mugs, with her children’s pictures and
names on them, from YourMugs, an Irish firm. A
couple of weeks after they have been
delivered, she notices that the names have
been spelled incorrectly. She complains to the
company and demands a refund. They inform her
that by company policy, which is published on
their web site, they cannot refund money on
customised products, unless they are informed
within seven days of receipt of goods.
Sylvia
refuses to accept this – the company made a
clear mistake in misspelling one of her
children’s names. Going to court is out of the
question for goods costing just 50 Euro. Then
she notices the company belongs to eADR – an
electronic alternative dispute resolution
service.
She
goes to their web site, pays 20 Euro to have a
dispute judged (YourMug pays an annual
subscription fee), enters her complaint,
forwards relevant e-mails and waits. Two weeks
later, eARD brings her mixed news, good and
bad. Based on their published refund policy,
the company is within the law and has no legal
obligation to refund Sylvia. However, YourMug
refunds half of the costs in order to keep her
as a costumer.
From a customer relations point of view
YourMugs is certainly losing more value from a
lost customer and the complaints she will
doubtless make to friends, family and
colleagues than would be lost by sending her a
replacement set!
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