Cheers for the FTC’s E-Commerce Mediation Proposal

Earlier this week, when the U.S. Federal Trade Commission (FTC) announced that it is promoting mediation over lawsuits as a means to resolve online disputes between e-tailers and consumers, I welcomed the news.

The agency contends that if measures are not put in place to keep the already sluggish legal system from bogging down e-commerce, it could slow the growth of the burgeoning new economy.

Just consider that the number of class action lawsuits seems to be growing exponentially. Just last week, America Online became the latest e-commerce giant to be slapped with such litigation.

Lawsuit Mania

Filed Monday in the Eastern District Court of Virginia on behalf of subscribers, the lawsuit alleges that some subscribers who installed the new AOL version 5.0 software encountered a bug that prevented them from using other ISPs.

Additionally, the lawsuit alleges that AOL “fraudulently concealed” the problems with its new version, and seeks millions of dollars in damages for users who were affected by the bug.

Meanwhile, it has been less than a month since a similar class action lawsuit was filed in Washington state alleging that Toysrus.com spoiled Christmas for an untold number of children by failing to deliver goods in time for the holiday.

That suit claims that the e-tail branch of the brick-and-mortar toy giant deceptively accepted orders for Christmas presents that it knew it could not deliver — even though the company has since given hefty rebates to these customers in an attempt to make up for the inconvenience.

A Better Way?

This kind of activity is what makes me glad to hear that the FTC plans to hold a workshop this spring in Washington, D.C. that is specifically designed to come up with ways to resolve such problems out of the courtroom.

Moreover, the agency plans to release a list of 17 questions later this week about mediation for resolving e-commerce disputes, in an effort to draw written comments from industry and consumer representatives, the academic community, and the public by March 21st.

Requests to participate as panelists at the workshop will also be accepted. The agenda of the workshop, to be held later in the spring, will be based partly on information provided in the comments collected from the interested parties.

Give Lawyers a Rest

By submitting to mediation, the FTC says that consumers and e-tailers can avoid the hassle of filing or answering lawsuits that are filed in different states. Because of the border-less nature of e-commerce, the FTC also says that using a mediation service could save both parties much money — especially when one considers the global nature of e-commerce and the small dollar (US$) value of most online transactions.

While I often find myself at odds with government agencies, I totally agree with the FTC and commend them for taking such action. I would not be surprised if most consumers and businesses embrace this logical initiative.

The only people who are likely to oppose the FTC’s suggestions are trial lawyers who approach lawsuits in the same way that businesses approach exploiting a new market.

What do you think? Let’s talk about it.