As of 15 Feb 2016: New Online Dispute Resolution Regulations
Another burden for the trader, or a good thing for consumer confidence?
From February 15th 2016, new rules regulating a European Online Dispute Resolution process come into effect.
A user friendly article by Maples, covering the introduction of the new rule, can be found on the Retail Excellence Ireland blog: New Dispute Resolution Rules for Online Traders. A more techical overview can be found on A&L Goodbody: New Website Obligations for Online Traders. The EU site for ODR is here: Online Dispute Resolution
The bottom line? As an online trader you will need to include a link to the ODR site on your website which your customers can find should they feel it necessary to ‘escalate’ a complaint to the EU ODR. You are also obliged to include an email address which they can use to contact you in case of complaints.
What happens if you don’t do this? If you breach regulations you risk a fine of up to €5,000 and / or 12 months imprisonment.
How does Dispute Resolution work?
The ODR maintains a list of Alternative Dispute Resolution entities. These are the people who will facilitate, mediate and adjudicate in cases of dispute. There is only one such entity listed for Ireland at present: NetNeutrals.eu.
Interestingly there are no entities currently available for the following EU countries: Croatia, Germany, Lithuania, Luxembourg, Malta, Poland, Romania, Slovenia, Spain.
If a customer has a complaint and has already unsuccessfully tried to resolve it with the trader, they can submit it to NetNeutrals and if the complaint is eligible it goes through the following process:
- Conciliation: Further details and first attempt to find a solution
- Mediation: Where conciliation does not work, a neutral third party, a mediator, joins the case and attempts to guide parties to a solution
- Adjudication: Where mediation does not work, a new neutral third party, an adjudicator, reviews the case and makes a final decision.
So the first step is to contact the trader?
Yes, the first point of contact to resolve a dispute is the trader.
NetNeutrals.eu outlines the process on their How It Works page, where they list the sorts of complaints they will deny as being ineligible:
1. The consumer has not attempted to contact the trader regarding the complaint,
2. The dispute is frivolous or vexatious,
3. The dispute is being or has been previously considered by another certified ADR provider or by a court,
4. The value falls below £100, or
5. The consumer submits a complaint more than 12 months after the date the consumer and trader were unable to resolve the issues.
In short: the complaint should be regarding a recent purchase worth more than £100, the consumer will need to contact the trader first, and the dispute should not be ‘frivolous or vexatious’.
What does all this cost?
The process is free for the consumer. The trader bears the cost of the dispute resolution process.
If you choose NetNeutrals as your ADR (you have no choice at the moment) the costs break into “Basic” (fewer than 100 cases per annum) and “Corporate” (greater than 100 cases per annum). The Corporate costs are not listed.
The basic costs are:
- + €100 once-off registration fee
- + €100 per case in Conciliation
- + €100 additional per case that moves to Mediation
- + €50 per case that moves to Adjudication
So if a case goes all the way through to adjudication it will cost the trader €250 after registration.
Do you have to register with NetNeutrals immediately?
As I understand it, no.
However, this is really not clear, I looked at how to make a complaint against a trader and it seems that I can only complain about “registered traders” on NetNeutrals (of whom there are only three registered on the site across both Ireland and the UK): Start a Case
The wording on their site states: “Beginning 1 October 2015 these regulations obligate traders to inform consumers about the availability of ADR. Additionally traders must advise whether they are willing to use an ADR scheme and, if so, which one they will use.” – so you will need to add a link to ODR on your site, and select which ADR scheme you would use – but it doesn’t sound like you have to register immediately. I am open to correction on this.
According to NetNeutrals if you do register with them your first case is free.
What happens if you don’t agree with the Adjudication?
We spoke by phone with NetNeutrals and asked this question. They say they are the mediator and will resolve the case with 95% success rate. Both customer and trader will need to accept this when they enter into the process. However, NetNeutrals does not have the power to enforce an adjudication at which point you can either give up on case or go to court.
How long does the process take?
A case has to be resolved within 90 days. NetNeutrals expect to resolve cases in 2-3 weeks for Ireland.
This is good news for the consumer. It gives a means of making a complaint both domestically and for cross-border European ecommerce purchases.
At first blush, the regulation sounds like a real burden on the trader – however, after investigation the process seems reasonably fair it might even be a positive thing for online traders if the existence of the ODR bolsters consumer confidence to make purchases online.
As usual, time will tell – we have still to see whether the process is managed fairly, whether participation is significant and whether the bottom line cost to the trader is far outweighed by the consumer confidence fostered by the ODR.