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Cyber-courts for e-consumer protection – ODR in Mexico, China and British Colombia

Consumer trust in products and services sold online, delivery services, and online payments is essential for ecommerce markets to develop and online companies and digital economies to grow. Consumers in many countries still do not trust the online economy. In another global survey, 86 percent of customers take some kind of remedial action as a result.

Online dispute resolution (ODR) offers consumers a method to air grievances and seek remedies in digital transactions. ODR is purported to resolve the voluminous number of disputes over rather small sums and minor complaints. Many online companies maintain their own dispute settlement systems: eBay, for example, resolves 60 million minor disputes between small merchants and buyers each year through a semi-automated online system. eBay’s Dispute Resolution Center is one of the world’s larger ODR systems and is considered highly successful; the semi-automated system asks buyers several questions and devises a solution; claimants can escalate disputes if the other party does not address the dispute in a timely manner. Refunds are enforced via chargebacks. PayPal also provides an ODR system, holding transactions when buyers begin a dispute and providing parties 20 days to settle. If the dispute is not resolved within 20 days, PayPal investigates and determines the outcome.

Government-supported ODR helps accelerate dispute resolution, cement consumer trust in ecommerce, and reduce personnel costs in court systems. Mexico’s ODR, Concilianet, is one such system. Operated by the Federal Consumer Attorney’s Office (PROFECO), Conacilianet was created as a pilot in 2008 to enable consumers who had purchased goods or services electronically or offline to initiate and resolve complaints or claims against major companies on an online platform. At the time, two companies agreed to pilot it; by 2017, there were more than 90 participating companies, including major airlines and retailers such as American Airlines, Walmart, MercadoLibre, Amazon, Movistar, and Latin America’s unicorn delivery service Rappi.

Typically, these complaints are related to sellers’ failing to meet contractual obligation. A typical dispute is over a seller’s charging for “mandatory” services it has branded “optional” on its website. There are no minimums for claims that can be brought. In disputes related to defective items, consumers can call Concilianet and send pictures of the item in question via Whatsapp. The consumer can also visit one of 147 Concilianet centers in shopping malls around Mexico. Most Concilianet procedures are however fully online, with the consumer submitting evidence such as videos, screenshots, and images of items, contracts, or receipts via email. The system helps consumers avoid travel and allows them to monitor the status of their complaints online, for example on their mobiles phones. Consumers receive a response in five business days. When PROFECO accepts jurisdiction over the dispute, it schedules an online hearing in a virtual courtroom with all parties present. There are two potential outcomes to a ruling: an agreement between consumer and the merchant; or a referral of the case to the relevant judicial authority.

Concilianet has a strong track record. In its first ten years, 2008-17, Concilianet attended to 28,000 cases and resolved 94 percent of them. In 2018, 97 percent of disputes were resolved. In 2012, it was reported that consumers recovered on average over 100 percent – 101 to be exact– of their monetary claims. In its early days, the system was found to reduce the time for resolving disputes by nearly 50 percent, from 60 to 30 days. Recently, these numbers have improved, with dispute resolution taking on average 21 days. About 93 percent of consumers that have used the system say they trust it; this is attributed to Concilianet’s use of court personnel in the dispute settlement process.

In China, cybercrimes and ecommerce-related disputes have created an enormous backlog in courts. To manage them, China’s Supreme People’s Court piloted a cyber space court in 2018 to handle IP and ecommerce-related cases in Hangzhou, capital city of Zhejiang Province. In prior years, ecommerce-related cases in the Hangzhou court rose from 600 in 2013 to 10,000 in 2016.

China’s Central Government granted approval for the Hangzhou court to tackle all cyberspace cases in the country, including ones related to online shopping, product liability in ecommerce, Internet service contract disputes, and online loan and copyright issues. The court is armed with high-tech devices that allow plaintiffs to file cases and upload evidence online. Complaints can be filed in five minutes; plaintiffs can verify their identity online through Alipay or by showing their ID to a court clerk in Hangzhou. Court hearings are conducted via online video sessions. Proceedings are managed by an AI judge sporting an on-screen avatar that prompts parties to present their cases and handles the simpler, standard functions; human justices monitor the proceedings and make rulings in each case. A judge delivers the verdict online. In its first case – a copyright infringement dispute between an online writer and a web company – the online video trial reportedly lasted 20 minutes.

Recently, China set up similar courts in Beijing and Guangzhou; together the three courts had accepted 118,764 cases, and concluded 88,401 by the end of 2019. WeChat, China’s main social media platforms, also has a “mobile court” that allows users to complete case filings, attends hearings, and exchange evidence all online. The mobile court operates in 12 provinces and regions.

The Canadian province of British Colombia has also opened a cyber-court. [v] The ODR system was introduced in small claims court in 2017 to attend to cases less than $5,000. This so-called Civil Resolution Tribunal (CRT) resolved an average of 2,000 cases per month during its first seven months. 85 percent were resolved; 12 went to a tribunal. Larger claims of $5,001-$35,000 are directed to the Small Claims Court.

The early steps in the CRT’s ODR system are automated, the subsequent ones involve human mediators. Some 45 percent of claimants use the system outside working hours, suggesting the platform is convenient to consumers that cannot attend court during the workday. There is a filing fee of $75-$125. The process involves three steps – first, guidance to settle the dispute; second, mediation if parties do not settle; third, adjudication in the absence of a mediated outcome where lawyers make a ruling that has the same authority as a court decision. Most cases are settled in the first stage.

The case is closed and the claimant can file a notice of claim with the court registry when the defendant does not respond to a case in two weeks. If the parties do not resolve their dispute during negotiation or facilitation, they can ask the Tribunal for a decision. Both sides must present all evidence such as contracts and invoices, even when the evidence may go against their own case.

CRT provides excellent data on its work and customer satisfaction. In a small sample of 56 respondents in March 2020, 94 percent agreed that CRT staff were professional in each interaction, 85 percent felt the CRT treated them fairly throughout the process, 79 percent felt the CRT's online services were easy to use, 78 percent felt their CRT dispute was handled in a timely manner

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