Online sellers have to cope with the introduction of dispute resolution procedures for consumer transactions. This applies on a national level and to cross-border trade in goods and services on a European level. The dispute resolution procedure should provide consumers with a cost-effective and uncomplicated alternative to the judicial procedure.
Compulsory Information on Online-Dispute Resolution from EU-Directives and EU-Regulation
When consumers have a problem with a trader regarding a product or service they bought, they can settle their dispute out-of-court through an Alternative Dispute Resolution or Online Dispute Resolution (ADR / ODR) procedure. As such procedures are an alternative to resolving disputes before a court they are called Alternative Dispute Resolution (ADR). When they are carried out online, they are called Online Dispute Resolution (ODR). Resolving disputes through ADR/ODR, in general, is easier, faster and less expensive than resolving disputes before a court. In the European Union, ADR/ODR procedures can take different forms and they can have different names, e.g. arbitration, mediation, ombudsmen, complaints boards.
The legal basis of the online-dispute resolution is the Directive 2013/11/EU on alternative dispute resolution in consumer matters (ADR-Directive) as well as the EU-Regulation No. 524/2013 of the European Parliament and the Council of 21.05.2013 on the online dispute resolution in consumer matters (ODR-regulation).
1. Future Duty to Inform arising from the ADR-Directive
The ADR Directive ensures that consumers have access to ADR for resolving their contractual disputes with traders. Access to ADR is ensured no matter what product or service they purchased (only disputes regarding health and higher education are excluded), whether the product or service was purchased online or offline and whether the trader is established in the consumer’s Member State or in another Member State.
Although National Legislators have not stringently stipulated an obligatory participation in an alternative dispute resolution procedure for online sellers, they have, irrespective hereof, standardised a general duty to inform for sellers.
In Germany, for instance, an online seller is generally obliged to provide information on his website and in his terms and conditions about the possibility to participate in a dispute resolution procedure before a consumer arbitration entity (§ 36 Sec. 1 German Consumer Dispute Resolution Act). Excluded from this are merely small businesses with a size of fewer than 11 employees (§ 36 Sec. 3 Consumer Dispute Resolution Act).
Member States will establish national lists of bodies offering ADR procedures (ADR bodies). All ADR bodies included in those lists will have to comply with binding quality requirements. In order to facilitate the transposition of the ADR Directive, the Commission has established an Expert Group composed of national ADR experts.
2. National Regulations on the Basis of the ADR-Directive
The ADR-Directive is already in force in most EU member states such as France, Italy, Spain, Austria, Great Britain and Poland.
The ADR-Directive was supposed to be implemented into German Law by the Federal Government by July 2015, but the Consumer Dispute Resolution Law (Verbraucherstreitbeilegungsgesetz – VSBG) has only been adopted in February 2016. The regulations of the Consumer Dispute Resolution Law will come into force at the end of February 2017.
According to the ADR-Directive, Member States must ensure that out-of-court resolution entities are created for domestic and cross-border disputes between consumers living in the EU and companies based in the EU arising from sales and service contracts. The dispute resolution procedure is not intended for disputes between companies, as it is imperative that a consumer is involved. The Directive standardises the minimum requirements for the dispute resolution procedure as well as the organisation and layout of the independent and impartial resolution entities. The resolution procedure should, in addition, be organised transparently, effectively, speedily and fairly and be made available to the consumer free of charge or for a low fee. The resolution entities must have the required specialised knowledge at its disposal; they must not be bound to the instructions of the disputing parties and should be paid irrespective of the result of the procedure. Access to the resolution entities is to be ensured via the internet as well as other ways (for example by post), and the procedure should not last longer than 90 days. In addition, consumers have the possibility to break off the resolution procedure at any time and to take ordinary legal action. Regarding online-sellers, Member States can include an obligatory participation in the procedure and the compliance of the resolution judgement in its national law. However, for instance, Germany has not included this in the Consumer Dispute Resolution Law.
Resolution entities which are already active or were recently set up and which correspond with the requirements of the Directive should be registered with the EU-Commission by the Member States so that a list of all recorded resolution entities can be published (complete list for all member states under:
ec.europa.eu/consumers/archive/redress_cons/schemes_en.htm). According to the passed version of the Consumer Dispute Resolution Law, online-sellers can offer an alternative dispute resolution on a voluntary basis, they are, however, not obliged to do so.
3. European Regulations arising directly from the ODR-Regulation
The ODR-Regulation stipulates the setting up of a European online dispute resolution platform by the EU Commission and regulates its cooperation with the national resolution entities according to the ADR Directive.
The online dispute resolution platform consists of a website which is available as a central contact point for consumers and businesses in particular for disputes arising from purchase and service contracts which were completed online. Alongside general information about out-of-court dispute resolution according to the ADR-Directive, it also offers the possibility of filing dispute cases via an online form for the purposes of resolution with an appropriate resolution entity. The platform will then determine the appropriate resolution entity in terms of the ADR-Directive and forward the dispute case to this entity. Further functions of the online dispute resolution platform consist of an electronic case processing application for the parties of the dispute and the appropriate dispute entity as well as the automatic translation of all information which is exchanged via the platform. This way, the platform will make it easier for all European consumers and online sellers to access out-of-court dispute resolution concerning online contracts, also beyond the borders of Member States. The online dispute resolution platform is available free of charge in all official languages of the EU. An obligation of the online sellers to get involved in an online dispute resolution procedure does not, however, exist, as long as the Consumer Dispute Resolution Act or another implementation act does not standardise such an obligation. The online dispute resolution platform is available since February 2016.
4. Future Duty to Inform arising out of the ODR-Directive
Just like the ADR-Directive, the ODR-Regulation also stipulates general duties of the online sellers to provide information in order to make consumers aware of the alternative resolution methods. Contrary to the ADR-Directives, the duties to inform of the ODR-Regulation apply to every online trader, irrespective of whether he is obliged to use same according to the stipulations of the regulation and the implementation act of the relevant Member State.
With the coming into force of Sec. 14 ODR-Regulation as of 9 January 2016, every online seller is obliged
- to set up a link on his website to the online dispute resolution platform which is easily accessible for consumers and
- to provide easy access to his email address.
For online suppliers who have agreed to the use of further (national) alternative dispute resolution entities or who are obliged to do so (e.g. energy providers), there are further duties to inform according to Art. 14 Sec. 2 ODR-Regulation, for example in terms and conditions, directly in online contract or offer-emails.
The reference text could read as follows:
“Information on online dispute resolution according to Art. 14 Sec. 1 ODR-Regulation:
The EU Commission has provided an internet platform for the online resolution of disputes (“online dispute resolution platform”). The online dispute resolution platform can serve as a contact point for out-of-court resolution of disputes arising from online purchase contracts or service contracts. The online dispute resolution platform is available via the internet address http://ec.europa.eu/consumers/odr
5. Consequences of Infringements
Whether the duty to inform arising from the Consumer Dispute Resolution Act and the ODR-Regulation represent market behaviour regulations in terms of European unfair competition rules (in Germany:§ 3 a Unfair Competition Act new version - § 4 No. 11 Unfair Competition Act old version), is up to now not clear. However, those who have hitherto commented, assume so.
The duties to inform are comparable with the regulations on supplier identification arising from the e-commerce-Directive 2000/31/EG, which are already recognised as market behaviour regulations in terms of European unfair competition rules. Corresponding violations against these legally required duties to inform could, therefore, be subject to warning (cease-and-desist) letters with costs from organisations (for example consumer protection organisation) or from competitors as being anticompetitive.