Dispute

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

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!

6. Alternative Dispute Resolution