The rapid development of electronic commerce brings new and complex challenges for consumers. Consumers sometimes encounter difficulties in seeking redress for unsatisfactory goods or services purchased online.
Consumers are largely reluctant to carry on with a dispute against a trader established in another EU country, since the costs are commonly excessive when compared to the value in dispute.
In view of this, the EU felt the need to establish dispute resolution mechanisms to help resolve disputes between traders and consumers in a manner that is fair, expeditious and cost effective.
These mechanisms provide an alternative to disputes before a court. The 2013 directive on alternative dispute resolution for consumer disputes seeks to encourage traders and consumers to participate in these out-of-court mechanisms for resolving disputes. The directive does not give a consumer the right to force a business to use alternative dispute resolution procedures, although member states remain free to make participation mandatory.
In order to encourage the use of such mechanisms, the directive requires member states to ensure that these procedures are available where both parties agree to use them to resolve their dispute. The directive further provides for the establishment of entities to mediate disputes initiated by consumers against traders.
The directive does not deal with disputes initiated by traders or disputes between traders, and only applies to traders established in the EU and consumers resident in the EU in relation to contractual obligations stemming from sales or services contracts, both online and offline. The scope of the directive excludes health care services, public providers of further or higher education, and non-economic services that are performed for no economic consideration.
There is also an dispute resolution for online purchases. EU Regulation 524/2013 on online dispute resolution for consumer disputes entered into force in January 2016, and applies directly in all member states. The regulation obliges the EU Commission to set up a European-wide online platform specifically designed to help consumers seek redress if they have a problem with online purchases.
The Commission has indicated that the platform will be operational as from February 15 and it will be accessible through http://ec.europa.eu/ consumers/odr/index_en.htm.
The scope is to create a a single point of entry for consumer and traders alike, free of charge and fast.
This new system will allow consumers to submit their contractual dispute through an interactive platform and to use an alternative dispute resolution procedure online in any of the official languages of the EU.
Consumer or traders who agree to online dispute resolution will complete an electronic complaint form and then decide on the competent entity to settle their dispute.
The platform will then transmit disputes to the national bodies that handle alternative dispute resolution procedures. The selected body must handle the case entirely online within a period of 90 days.
Therefore, the platform itself will not seek to resolve the dispute itself; rather it will, if both parties agree, channel such disputes to be handled on the ground by domestic alternative dispute resolution bodies.
Online traders and marketplaces established in the EU that engage in online sales or service contracts with consumers have to comply with new information requirements regarding this new platform. They need to make sure that consumers are aware of the new online dispute resolution mechanism by providing an easily accessible electronic link on their websites to the platform and to insert such links in any offers made by e-mail. Where applicable, the information will also be provided in the general terms and conditions related to online sales and service contracts.
Penalties for non-compliance with the new requirements are to be determined by national law and these will vary between EU member states.
The online dispute resolution does not apply to all disputes. Excluded are disputes between consumers and traders that arise from sales or service contracts that are concluded offline or to disputes between traders. In line with the directive, the regulation is only applicable to traders established in the EU and consumers resident within the EU.
The launch of the online dispute resolution platform by the European Commission is considered a milestone for e-commerce in Europe. It is clear that the EU has actively set itself to be a forerunner in creating a comprehensive online dispute resolution system for cross-border consumer transaction.
jgrech@demarcoassociates.com
Josette Grech is an adviser on EU Law at Guido de Marco & Associates.