eBay’s Online Dispute Resolution

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eBay’sOnline Dispute Resolution

eBay’sOnline Dispute Resolution and How It has Assisted Other E-Commerce Companies To Deal With ODR

The digital age has revolutionized business practices by theintroduction of online transactions. More companies are embracinge-commerce platforms with the objective to create new business modelsthat promote quicker sales. More people currently use the internet totransact with others in the same locality and those in differentparts of the world. When difficulties arise in these transactions, afactor that is inevitable, it is imperative for buyers and sellers tofind a way of resolving the problems. Online dispute resolution, is,therefore, a suitable mechanism for solving the emerging problems.

Onlinedispute resolution involves resolving disputes that emerge whenconducting transactions using online business podiums. ODR is nottied to a particular geographical location consequently, disputescan be resolved even before they escalate to psychical courtrooms anddisrupt business operations. The approach is also not linked to aspecific legislative body accordingly, there is no need to acquireexpensive legal professionals to solve disputes (Rule 2003).

Thefirst e-commerce companies to utilize online dispute resolution werethe auction websites. According to Rule (2003), the sites were morevulnerable to conflict because the transaction environment usuallylinked the buyer seller and then provided them an opportunity toagree and strike a deal. It was, therefore, difficult to identify theindividual on the other side of the transaction and whether theperson is providing factual information about the product theyintended to sell. Due to the lack of personal contact, it can beproblematic to trust that the other party is providing valid facts.Online dispute resolution programs were, therefore, devised toresolve any issues that may emerge during the business transaction.Different online companies use diverse approached of ODR. eBaybeing one of the leading e-commerce websites went through thetransition from neglecting the problems that users experience toactively engaging customers insolving the problems that arise during transactions. Thispaper seeks to examine e-Bay’s online dispute resolution and howthe company has overcome its online dispute settlement challenges.The presentation will also explore the differences between eBay’sonline dispute resolution and ODR in other countries. Lastly, thepaper will highlight the contributions made by the company to helpother e-commerce organizations to deal with their online disputeresolution

Backgroundof Online Dispute Resolution at eBay

eBayas one of the prominent e-commerce companies encounters numerousconflicts. However, it seems that the online dispute resolutionapproach adopted by the firm is efficacious. According to a BBCreport in 2015, e-bay has the most advanced and workable onlinedispute resolution system that jurisdictions such as Wales andEngland should adopt to evade the various civil court proceedings.The rows experienced by eBay are minor. Nevertheless, the firm hassucceeded in resolving numerous disagreements. For instance, thedispute resolution system operated by the business addresses 60million complaints between small businesses each year (BBC, 2015).The ODR conference (2016) also ranked eBay’s ODR as the largest inthe world. The methodology used by the company has prevented 90% ofthe disputes from making it to the courts.

Themechanism of eBay’s dispute resolution process covers variousconflict issues. One of the areas covered involves unpaid items wherethe buyer has not paid for a product that he/she has successfully bidfrom the company. The dispute is primarily initiated by the sellerwho has not received payment. Another critical area involves itemsnot received. The disagreement occurs when a shopper makes a purchasefor goods but has not received the goods within a reasonable time. Another segment covered is when the items sold are not as described.The row occurs when the buyer purchased a merchandise but receives anitem that is different from the description given in the auctionlisting. Thecustomer usually initiates the complaint. The fourth area is thefeedback dispute. This occurs when a purchaser was unhappy with theoutcome of the transaction offered by eBay. He/she then posts aneutral or negative comment about the company. If the firm wants toremove the feedback from the eBay Feedback Forum a dispute can beinitiated (Ennico, 2007).

Overthe years, eBay has devised several systems to resolve the four typesof disputes that emerge while conducting online transactions. The ODRhas been pretty similar, and to a large extent, it has depended oncooperation between the seller and the buyer. For instance,overpriced items, products delivered not as described and for goodsnot received, the dispute resolution process will involve three stepsand a fourth phase can be selected according to the client’spreferences (Ennico, 2007).

Thestages include:

  • Subjecting the dispute to a problem Diagnosis – The step involves a series of computer generated emails that are designed to eliminate complaints based on common misconceptions. For instance, when a buyer initiates an ‘’ Item Not Received’’ claim in a period less than twenty- four hours after the auction ends, he/she will be told that no individual seller can process, pack, and ship items within the short timeline( Ennico, 2007).

  • If the claim is not solved in the Problem Diagnosis step, the parties involved will engage in a ‘’Tech Assisted Negotiation.’’ Both the buyer and the seller will obtain programmed emails from the customer support staff which are directed towards pushing the claimant to the actual settlement. (Ennico, 2007).

  • The third step involves a negotiation that is tech assisted. The process does not lead to a formal settlement, but the disputing parties are encouraged to mediate their dispute with the help of an independent dispute resolution company that has partnered with eBay (Ennico, 2007).

  • In the event that the claimant feels that they are right, they can choose a fourth step which is to escalate the dispute. Such action will direct the issue to the company’s customer service representatives who will examine the e-mail communication between the parties and then he or she will determine which party is correct. In most cases, eBay customer service representative are trained to handle the claims to a certain level (Ennico, 2007).

Thecompany is currently using a service referred to as the SquareTrade.The partnering company is operated in San Francisco from(www.squaretrade.com).The affiliate is an independent firm that offers help on onlinedispute resolution on behalf the business. It provides two services:a free web-based forum, which allows users to attempt to resolvetheir differences on their own or if necessary, the use of aprofessional mediator is offered. Initially, the company took up therole of mediation although currently it also provides arbitration forcertain transactions on eBay Motors. The ODR service is free for alleBay buyers and sellers. SquareTrade usually contacts and encouragesthe other party to respond to the case. EBay’s mediation processseeks to maintain confidentiality for all clients. Both the claimantand the respondent have equal rights. If mediation is to beeffective, both parties have to be assured that justice will beattained. The company, therefore, works with the SquareTrade whoensure that the facilitators used are not biased. For instance, mostcustomers have provided positive ratings for the mediation servicesoffered by the company (Ennico, 2007).

Differencesbetween and ODR in Other Countries

eBayas a trendsetter in ODR has adopted a system that varies from theapproaches used in other nations and companies across the globe. Forinstance, businesses in the UK have noted the uniqueness that existsin eBay’s ODR technique. Several other countries have madeproposals to adopt a similar structure. However, variations stillexist. Morris (2015), divulges that the UK has recently embraced anODR that involves the use of online courts that are fashionedaccording to eBay’s system of solving complaints. The differencebetween the UK ODR and eBay approach includes the integration ofjudges into the online dispute resolution process. The execution ofthe method necessitated the installation of massive digital screenswhich are placed in magistrate courts. After examining the evidence,the judge then makes a verdict based on the information introduceddirectly to the court by the lawyers on their laptops. The UK alsofitted Wi-Fi in Crown courts in order to expedite the ODR process.According to Morris (2015), the use of judges in the procedure isefficient because they would rule on cases that involve up to£25,000. The courts will not require parties to appear physically toprovide evidence. According to Morris (2015), the ODR procedure isperceived as beneficial because it reduces the cost of online disputeresolution.

Itcan be stated that the countries regulation influences theintegration of judges into the online dispute resolution process inthe UK. The European Convention of Human Rights Art 6 postulates thateach person should have access to the courts. The implication is thatdisputing parties cannot choose to settle their differences out ofcourt by using an alternative approach (Heuvel, nd). The use of the Alternative Dispute Resolution (ADR) whichinvolves settling claims out of court through mediation andarbitration without hearings is not acceptable (Heuvel, nd). Thisexplains the reason why the UK has sort to integrate judges in theprocess of ODR. In the case of eBay, a US-based company, out of courtsettlements are allowed as stipulated by regulations such as theAlternative Dispute Resolution Act of 1998 and the AdministrativeDispute Resolution Act of 1996. Consequently, it evident that thelaws in a nation significantly influence the type of conflictresolution methodology used by e-commerce companies.

Inthe Netherlands, settlement of disputes also varies from the approachimplemented by eBay. Dutch companies use a procedure known as the ‘’binding advice. ’’ The method is an Alternative DisputeResolution which involves the use of a Complaints Board whichconsists of affiliates trade associations ( Heuvel, nd). The termsand conditions for online companies involve the fact that theirclients have an option of presenting a dispute to the ComplaintsBoard as opposed to taking the grievance to an ordinary court. However, before transferring the argument to the board, the claimanthas to try to solve the issue with the other party. If a solution isnot found, then he/she can proceed to the panel submission. The roleof the board is to gather all the evidence from both factions. Aftersufficient examination, the board then comes up with a judgment thatis legally binding. Appealing the ruling of the board is notpossible. Nevertheless, one can submit the matter to the formal courtprocess in two months. This will provide time for the conflict to beverified as stipulated by the Dutch Civil Code art (7:904). Thejudge has the authority to pronounce the decision of the ComplaintsBoard as invalid if has ignored the essential values of proceduralregulations. In most cases, the Complaints Board tries to ensure thatthe disputes do not proceed to the courts. Currently, there are morethan 29 Complaint Boards in the country which are affiliated toFoundation for Consumer Complaints Boards. Heuvel (nd), highlightsthat a key benefit of the boards in resolving online disputes is thatsolutions for online disputes are guaranteed.

The findings presented on Netherlands approach to ODR discloses thatonline dispute resolution in the country follows the AlternativeDispute Resolution (ADR) just like eBay. However, it can be notedthat their approach does not involve the use of a partnering companysuch as SquareTrade, but rather, the jurisdiction uses the ComplaintBoard. Also, another emerging difference is that eBay ODR systemallows customers to solve the problem directly with the assistance ofthe SquareTrade technology. In the context of Netherlands, the ODRprocess involves giving the clients an opportunity to resolve theirmatter without any assistance. In the event that they do not agree,the case is transferred to the Complaints Board (Heuvel, nd).

InChina, online dispute resolution is considered significant. As aresult, resolving disputes using virtual platforms has developed inthe previous decades. Many Companies is the nation are activelyinvolved in e-commerce. Consequently, disputes frequently arise.Three main procedures characterize the process. The first approachincludes the use of (CIETAC) which is China International Economicand Trade Arbitration Commission. The agency majorly settles disputesthat are related to domain names such as disagreements fromelectronic business and address differences that emerge betweenbuyers and sellers (Qisheng and Song, 2010). CIETAC also offersservices that have domain names that are authorized by the DomainName Dispute Resolution Policy. Qishengand Song (2010), disclose that the role of CIETAC insolving online disputes has been useful. This is because the agencynot only handles a large number of rows but also, cases that involvediverse issues that emerge in e-commerce.

A second approach adopted in China for online dispute resolution isthe use of the China Online Dispute Resolution Center (China ODR).The organization is the first contractor of online dispute settlementservices. The company offers arbitration, mediation, notarization,and conciliation. The disputing parties have to make an onlineregistration to be members of the Chinese ODR after which they canregister for their online mediation or negotiation process. Thepodium for conducting discussions is automatic. However, participantsin the process pay different charges for the mediation, negotiation,and agreement. The discussions can take place through the onlineplatform or in some instances the differing parties can choose to useother podiums in the event that they do not find an amicable solutionto the issue(Qisheng and Song, 2010).

Thethird ODR approach adopted by China is the use of the internalcomplaints mechanism which is a system developed by the networktransaction platform. The website accepts the claims presented by theclients and then resolves the issues by using consultations. Forinstance, Taobao one of the biggest networks in China settled about900, 000 disputes in 2009 using the internal complaints mechanism. After the successful ODR, Taobao established a platform for consumerprotection where clients are free to place a claim at any time. Inthe event that a dispute arises, the applicant is to contact theConsumer Rights Officer within 48 Hours. The officer will then dealwith the issue(Qisheng and Song, 2010).

Itis evident that the Chinese e-commerce market has incorporateddiverse approaches of ODR. The methods discussed above vary with theeBay tactic in many ways. First, the business community in China hasinstituted agencies that deal with online conflict resolution. As aresult, the organizations take charge of the ODR process. In mostcases, the disputing parties do not begin the process by resolvingthe problem individually. They are initially directed to facilitatorswho work on the matter. For instance, the Chinese internal complaintmechanism accepts the complaints presented it is then handed over toconsultants who try to resolve the issue. eBay on the contrary,provides a link for the disputing parties to attempt to resolve theissue before a third- party is involved (Qisheng and Song,2010).

Canadaas adopted an online dispute resolution system that involves the useof a virtual tribunal that handles domain conflicts that emerge amongclients. In the event that a domain dispute occurs, the claimantlaunches a grievance through email or the complaint form. The issuesare then transferred to an arbitrator who will handle the conflict.After the two factions have presented their side of the story, themediator offers a decision that is legally binding (Heuvel, (nd). Thedifference between the Canadian ODR and the eBay’s approach arisesfrom the method of reporting the row. In the context of the CanadianODR, a client has to write an email when reporting the dispute. Thisdoes not occur in context eBay where the SquareTrade system firstoffers customers a platform for submitting their claims and an areafor solving the problem directly with the assistance of theSquareTrade technology.

ChallengesExperienced by eBay in ODR and How the Company Overcome Its Problems

eBayhas wrestled with the issue of massive dispute volumes. Each day, asmall proportion of the million transactions conducted on thecompany’s website go awry. Consequently, the company has over theyears adopted a system of ODR (Goldsmith, Ingen-Housz, and Pointon,2011). The first program was contracted in the 1990s from the OnlineOmbuds Office which provided mediation services. The firm then movedto the SquareTrade portal which operates to date (Mania, 2015). Toeradicate the problem of numerous disputes, the partnership withSquareTrade has significantly assisted the company by making the ODRprocess easier and simplified. SquareTrade first offers customers aplatform for submitting their claims and a podium for solving theirproblems directly with the assistance of the SquareTrade technology.The online link for the complaint form is available for all eBayusers across the globe (Abernethy, 2003). For instance, whenconducting a transaction, the link on Figure. 1.0 will appears to allbuyers and sellers. The partnership between SquareTrade and eBay hasassisted the company to develop a quick online dispute resolutionsystem.

Figure1.0 The SquareTrade technology

Based on the facts provided above, it can be stated that the ODRmechanism adopted by the company has assisted the business to resolvethe challenge of massive online disputes. However, it is essential totake note of the fact that eBay ODR system has been effective due toits business policy which focuses on a robust application of ODRregulations. Goldsmith, et al. (2011) disclose that the company’sODR laws are uniform and they apply to all users globally. When thecompany was asked under which regulations they mediated ornegotiated, eBays disputants reportedly replied that it was ‘’eBaylaws.’’ In other words, the policies used by the firm in its ODRwere viewed as lawful orders determining their obligations and rightsnot as specified by national consumer protection laws in theircountry but as stipulated by eBay’s policy (Goldsmith, et al. 2011).

Anotherchallenge that affected eBay’s online business operations was theissue of trust. When e-commerce was initiated, building confidenceamong clients was a significant problem. The anonymous characteristicof the internet instigated fear among users to the extent that manycustomers stopped shopping online. Some of the problems cited includedeferments between the period of the payment of goods and theinterchange of services/ goods. Also, people complained that thelack of physical contact eliminates trusts between parties involvedin transactions. Surveys have indicated that the commitment andaccess to an online dispute resolution platform is a top priority formany consumers. It influences their readiness to bid or purchasegoods at a higher value on the eBay website. After the customers tookpart in the conflict resolution process by SquareTrade, those whoresolved their disputes successfully become more active sellers andbuyers (Abernethy, 2003). It can, therefore, be stated thatimplementation of an online dispute resolution system by eBay loweredthe widespread doubts among customers.

Onlinedispute resolution was also a costly ordeal for eBay. In the eventthat a row culminated to the courts, the company would incur severelosses. For instance, in the year 2003, the cost of resolvingdisputes was over one million US Dollars. The implementation of theSquareTrade technology in ODR resulted to a decline the cost ofresolving the frequent tussles that occurred. Direct negotiation is,for instance, performed at no charge. In the event that a mediator isallotted the party is charged $20.Themaximumtimetaken to resolveanissue is two weeks (Abernethy, 2003). eBay has, therefore, greatlybenefited from the system in terms of cost reduction. The clients arealso assisted because the price of solving transacting disputes islowered.

TheContributions eBay’s Dispute Resolution System to E-Commerce andOther Companies

According to Kohler and Schultz (2004), current online disputeresolution is mired by several challenges. One of the biggestproblems is the issue of confidence. When companies implement anonline dispute resolution system, a key expectation is that the ODRwill play the significant role of establishing the assurance that isstill critically lacking in the field. A big question that arises iswhether eBay has overcome this challenge. When the eBay disputeresolution system is critically examined, it can be stated that ithas increased the much- needed assurance in the process.Consequently, many companies across the globe have tried to duplicatethe system used by the business. eBay has adopted an approach thatensures that a dispute is resolved before it reaches a judge. ProfRichard Susskind, a UK IT specialist, proposes that companies inEngland and Wales should adopt the eBay method, which ascertains thatpeople are assisted inidentifying and understanding the best approach to resolving theironline rows. After this, they can use an online facilitator who willhelp them to reach an agreement (BBC, 2015). The professor arguesthat the system increases the client’s trust in the ODR process. It is evident that eBay has acted as a pacemaker in effective disputeresolution which has improved the self-assurance of many companies,buyers, and sellers. One can now believe that online disputeresolution works.

TheeBay online dispute system has also resolved the challenge ofconfidence experienced in e-commerce based on the fact that thesystems provide an immediate alert when a conflict occurs. It isfascinating that if a problem or dispute emerges between a seller ora buyer, either party does not struggle to follow the company tostate their dissatisfaction and then wait for several days for asolution (Ennico, 2007). The eBay system has eliminated all theseintricacies for both the buyer and the seller. For example, in atypical case, SquareTrade first provides a platform for the partiesto attempt to solve their problem openly with the assistance of theSquareTrade’s technology. The clients are not charged. Forinstance, if it is a buyer who is presenting a claim, he/she willhighlight the case and list the issue, the customer then gets anotice that states that the matter is opened. If the purchaser andthe vendor cannot resolve the issue, then a facilitator can be used(The ODR conference, 2016). Image 1.0 provides a simple overview ofthe ODR system at eBay.

Figure1.0: Overview of the ODR system at eBay.

Source: SquareTrade.com (2017)

TheODR conference (2016), discloses that the eBay’s dispute resolutionapproach can resolve various problems when selling and buyingproducts on the website. For example, glitches that involve receipts,the payment and the condition of good. The company’s DisputeResolution Center is devised using a system that can identify thedifficulty. The next step is that an automated negation isestablished which then culminates with arbitration and mediation. Themodel has assisted many buyers and sellers to interact cautiouslywhen transacting on the internet. The key objective of the model isto provide a platform where vendor and the purchaser can communicatebefore a conflict escalates to the company level and later to thecourts (The ODR conference, 2016).

An interesting aspect about eBay is that the company does not buy norsell any product or service. It simply offers a platform where theseller and the buyer can interact just like many other e-commercecompanies. A major reason why the ODR approach adopted by the firmhas been successful is that it acts as a neutral party that wants toensure that the transaction between the purchaser and the supplierruns smoothly. The ODR conference (2016), therefore, proposed thatmany e-commerce companies, governments, and hospitals should embracean online dispute system like that of eBay.

Itcan also be stated that eBay reduced the cost of resolving disputeswhen conducting online transactions. It is apparent that courts donot provide a sensible option for ODR because of the prohibitive costthey entail when resolving a typical dispute. It is rare for an eBaydispute to end up in court because the row is solved before itescalates. Since eBay adopted the SquareTrade system as an onlineassisted negotiation and mediation approach, the company resolvesabout 1.5 Million disputes each year. The procedure was designed tooperate at very low costs because the process is handledautomatically by the computer system. As a result, parties to notneed to seek legal counsel on the issue. Many e-commerce companiesacross that globe perceive eBay’s approach of ODR as prolific dueto the benefit of cost reduction (Goldsmith, et al. 2011).

Delivery of quick services is an essential practice, especially whenresolving conflicts. It is evident that people have diversepersonalities. Some clients may be very impatient when a disputeemerges to the extent that they can tarnish the name or the company.eBay has demonstrated through its online ODR that resolving conflictswithin a short period is possible. E-commerce companies shouldtherefore embrace the methodology used by the corporation is order toexpedite the dispute resolution.

eBayhas also demonstrated that the implementation of an effective ODRsystem can be backed by the policies of the organization. The companyhas been in the forefront to ensure that its regulations promote andsupport effective dispute resolution in order to protect the rightsof the customers. Companies should, therefore, develop guidelinesthat uphold the rights of the buyers and sellers even when disputesarise.

Conclusionand Recommendations

Thepaper underscores the fact that eBay is a trendsetter in onlinedispute resolution. Thediscussion has examined case studies of countries such as theNetherlands, Canada, China and the UK. The differences between theODR approaches adopted by these nations, and the eBay tactic havebeen highlighted. A key conclusion that was drawn is the eBay has themost productive online dispute resolution system. Based on theanalysis, there are many of prolific qualities that e-commercecompanies can emulate from eBay. Foremost, eBay has implemented anonline ODR system that has resolved the difficulties that buyers andsellers encounter when conducting online transactions. It is,therefore, commendable for companies to initiate a workable ODRsystem. A key attribute demonstrated eBay is the ability to devise asystem that resolves conflict on the website before it escalates tolevels of the judicial system. As noted, countries such as the U.Khave tried to embrace the eBay approach, but they have opted to usejudges to resolve the conflict due to the regulations of the state.It is apparent that such a methodology is expensive andtime-consuming. This paper, therefore, argues that in order toimplement an efficient conflict resolution system the ADR systemselected should not heighten the dispute from the online platform tothe courts. Also, a functional dispute resolutions system shouldinvolve a third party who is neutral. The facilitator should emanatefrom a well-respected organization such as SquareTrade. Anotherrecommendation that can be derived from the eBay case is that anorganization’s policy can significantly influence the practice ofdispute resolution. The company has a strategy that emphasizes theprotestation of the rights of the customers. Consequently,organizations should adopt business policies that seek to safeguardtheir clients. In conclusion, although online mediation has receivedcriticisms because of its impersonal attribute, in future it will beperceived as the traditional intervention approaches. It will one daybe prominent due to its ability to resolve online conflicts.


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