Online Alternative Dispute Resolution: An Issues Primer
Internet Law and Policy Forum
Jurisdiction II: Global Networks/Local Rules
San Francisco, California, 11-12 September 2000
Professor and Associate Director
Center for Law, Commerce & Technology
University of Washington School of Law, USA
Better Business Bureau Online (BBB Online)
The Better Business Bureau Online recently opened up its online dispute
resolution service. The BBB Online is backed by 86 years of experience
of the Better Business Bureau's involvement in self-regulation and alternative
dispute resolution. Their services are now available online for consumers
with online privacy complaints against both BBB Online program participants
or non-program participants.20
BBB Online is one of the most well developed Online ADR web sites and has extensive procedural requirements for processing a dispute. The resolution process begins with a consumer contracting the Dispute Resolution Intake Center at which point a claim must meet a series of eligibility requirements to move forward21.
Before a claim can progress, a consumer must demonstrate that they have made a good faith effort to settle the complaint. Once this prerequisite is met, a consumer submits a description of the complaint as well as any correspondence with the merchant in question. The respondent is then contacted and asked to respond within 15 days. The response is the forwarded to the complainant, excluding any confidential information. If the complainant does not respond within ten days the PPRS, the body that decides the case, may then take up the case and come to a decision.
If the claimant files a response, a respondent is given ten days to file a supplemental response. One a response is filed or the ten days have expired the PPRS then takes up the case. A PPRS decision results in either no corrective action, corrective action, or an appeal by the respondent. If an appeal is filed its decision is final, and non-compliance with the decision will result in a forwarding of the case to the relevant governmental agency.
clickNsettle.com is a wholly owned subsidiary of NAM (National Arbitration and Mediation), a national provider of arbitration and mediation services and electronic case management software. It is the self-proclaimed world leader in electronic dispute resolution, and seeks to resolve disputes with a monetary settlement quickly and inexpensively. clickNsettle.com addresses all kinds of disputes.
The process begins with one party registering and providing information regarding whether they are the plaintiff or defendant, a general description of the dispute, contact information for the adverse party, and an initial monetary demand (if they are the plaintiff) or offer (if they are the defendant). The other party is then invited to negotiate.
Who may file a complaint?
Anyone with an online dispute that sets up an account with clickNsettle.com may have a dispute resolved.
As opposed to other Online ADR sites, clickNsettle.com utilizes a fully interactive web site to settle disputes.23 One party submits their dispute and the amount of their initial offer or demand. The other party responds with their offer or demand. clickNsettle.com calls a submitted dispute a "case"). Either party may submit new demands and/or offers at any time for a period of 60 days. All offers and demands are "blind". Neither party knows the amount of the other party's offer or demand. If the last demand is ever within 30% of the last offer, the case will settle for the midpoint of the offer and demand.
Offers and demands must follow an established framework. Each new offer must increase by a minimum of 5%. Each new demand must decrease by a minimum of 5%. This is intended to promote good faith negotiating. All figures submitted are blind to the opposing party, and therefore the only number shown is the other party's actual bid amount. Either party may terminate a case at any time. Cases not settled will expire after sixty days.
The case will settle if one of the following occurs:
1)The plaintiff's demand comes within 30% of the defendant's offer,
in which case the case settles for the midpoint of the offer and demand.
Last Demand: $50,000
Last Offer: $45,000
Case Settles for: $47,500
2) The plaintiff's demand is below the defendant's offer, in which case
the case settles for demand.
Last Demand: $50,000
Last Offer: $60,000
Case Settles for: $50,000
In order to negotiate on clickNsettle.com you must have an approved account or provide credit card information. Corporations that are legally registered in the United States may apply for a credit account with clickNsettle.com. All other users of the system will be required to provide credit card information at the time they submit or respond to a case.
The submitting party pays a $15.00 submission fee to enter a case into the system. Payment of the submission fee allows the submitting party to enter their initial offer or demand at no-charge.
For each offer or demand entered during the first 20 days of the Negotiation Period each party pays $10.00 per offer or demand. For each offer or demand entered during the next 20 days of the Negotiation Period, each party pays $15.00 per offer or demand. For each offer or demand entered during the last 20 days of the Negotiation Period, each party pays $20.00 per offer or demand.
If the case settles for less than $10,000, each party pays a $100.00 settlement fee. If the case settles for $10,000 or more, each party pays a $200.00 settlement fee.
clickNsettle.com fees are billed to the parties' accounts or credit cards upon settlement, expiration or termination of a case. All fees are payable in US Dollars. Finally a detailed invoice is sent via US Mail.
Parties to a clickNsettle.com dispute must agree to be bound by any settlement reached. Any settlement, therefore, serves as a bar to any further claim or cause of action relating to or arising out of the facts and circumstances of the subject case. The claimant agrees to furnish the defendant with a legal release and thus agrees not to sue the defendant in a court of law unless the defendant fails to pay settled amount. In the event that a settlement is not reached, the parties are free to pursue traditional litigation.
SquareTrade.com provides customers of e-commerce sites with a new medium for buyers and sellers to settle disputes. In addition they recently began to function as a certification authority. SquareTrade.com utilizes impartial mediators to reach fast and fair solutions. They seek to avoid the high costs of litigation and provide an affordable forum to hear disputes arising online, in an online forum. In this manner they seek to "increase trust" as customers transact online.
An electronic complaint is filed in which a complaining party states, in its own words, what has taken place. The other party is notified by email. If all goes well the opposing party responds to the complaint. The complaint is posted on a secure SquareTrade site and the parties try to resolve the problem themselves, using SquareTrade's proprietary technology and process. If an agreement cannot be reached a mediator is assigned to the case. The SquareTrade mediator then guides the parties through mediation. If all goes well the parties are able to settle their dispute.
Who may file a complaint?
Initially the service was only available to eBay.com customers, but has recently opened its doors to other online transactions.
SquareTrade utilizes email, and its proprietary mediation technology to settle disputes. Problems are typically resolved in about 10 to 14 days. However, the length of the process depends on how quickly the parties involved respond to messages. The more quickly the required information is provided, the faster a mediator will be able to help the parties develop an agreeable resolution. The SquareTrade mediator helps the case participants to explore their positions, needs and interests, generate their own options for settlement, and assist them in reaching a mutually acceptable agreement.
In the majority of cases, both sides of a disagreement want to find a solution. SquareTrade works to encourage the defendant party to respond to a case but does not guarantee that the other party will participate as the process is entirely voluntary. In many cases, a SquareTrade partner marketplace (e.g. eBay) may also work to encourage all parties to participate. Generally the mediation process results in a resolution mutually agreeable for both parties. In the event that the parties can't agree, the parties may ask the mediator to recommend a resolution based on each party's position and on principles of fundamental fairness. Generally if the parties reach an agreed upon resolution, compliance with the terms of the settlement is not a problem. If necessary, however, a party can always use the court system as a method of recourse.
Currently, there are no costs to use SquareTrade's system to file a case. The complaining party and their adversary can use the system to outline issues, and respond to each other efficiently. During the current pilot period with eBay there are no fees to involve a SquareTrade Mediator to assist buyers and sellers in resolving issues related to an eBay transaction. Outside of eBay transactions, if a customer a requests that a SquareTrade mediator assist in reaching a satisfactory agreement, they will be charged $10 plus 2.5% of the amount in controversy.