Addressing the lack of effective consumer redress through extrajudicial redress mechanisms in an evolving digital market

Abstract

With more consumers purchasing online come more disputes which need online redress. The EU consumer has some options to choose from depending from which online trader the purchase was made. A consumer can turn to the EU ODR redress mechanism or the private mechanisms. However an ordinary consumer might not know which mechanism is more effective at giving them redress. The EU ODR mechanism is an out of court option which relies on traditional ADR. The mechanism has the benefits of being a fast and cheap process which can be used to incentivise traders to act. It also has the drawbacks in the form of lack of harmonisation between ADR bodies with possible non-binding decisions and traders can choose to not go before the ADR body. Private redress mechanisms, like eBay, rely instead on automation and avoid human intervention. Consumers are attracted to this mechanism due to its very fast and free nature and are reassured as eBay acts as a neutral third party mediator. However it has drawbacks with cases having to be simple and there being cultural and linguistic misunderstandings. The most effective redress mechanism is dependent on the scenario. However the private ODR mechanism seems to be the most effective when a consumer has both redress mechanisms available to use. The EU ODR mechanism can be seen as a complimentary redress mechanism which is relatively new and has the potential to be even more effective with more improvements. Smart contracts are beginning to be used for consumer redress, however they are few and still under development. The aspect of self-execution is appealing however with limited regulation and further technological development needed, it is not a current option for a redress solution.