FTC: E-Commerce Mediations Should Replace Lawsuits

The U.S. Federal Trade Commission (FTC) has announced that it wants to promote mediation over lawsuits as a means to resolve disputes about basic consumer transactions conducted over the Internet.

In an effort to prevent the slow legal system from bogging down the lightning fast growth of the nation’s largest new market, the FTC plans to hold a workshop this spring in Washington, D.C. to explore how such alternative dispute resolution methods might replace lawsuits.

“Consumers must be confident that the goods and services offered online are fairly represented and the merchants with whom they are dealing, who may be located in another part of the world, deliver on their commitments,” the FTC said. “Consumer confidence also requires that consumers have access to fair and effective redress for problems arising in the online marketplace.”

The FTC wants to see if using alternative dispute resolution programs will “contribute to fostering consumer confidence without unnecessarily burdening business, and to examine the use of alternative dispute resolution as one means of providing transparent, effective, quick and inexpensive redress for consumers engaging in online transactions.”

Seventeen Questions for Comments

The FTC 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.

The questions will address existing alternative dispute resolution programs, challenges to developing alternative dispute resolution programs for online transactions, what makes a dispute resolution plan fair and effective, and what the state or federal government’s role should be, if any.

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

Cheaper, Faster Results

By submitting to mediation, the FTC suggests that consumers and Web merchants can avoid the complication of filing or answering lawsuits filed in different states. Because of the “borderless” nature of the Internet marketplace, the FTC argues, using a mediation service could be less expensive and less of a hassle.

Given the global nature of e-commerce and the small dollar (US$) value of most consumer transactions, trying to settle disputes in court is probably not a practical option for most consumers and businesses, Secretary of Commerce William Daley said.

The spring workshop, however, would be the first step toward such easy resolutions, since no framework for an alternative dispute resolution system for the e-commerce world is yet in place. The FTC hopes to bring together industry representatives, consumer groups and members of the public to consider how to start building that framework, Daley said.

Dispute-Free Internet Grows Fastest

The FTC has already spent considerable time issuing guidance to consumers on how to protect themselves online and to Web merchants on how to protect privacy and foster confidence amongst U.S. consumers.

The FTC, as well as many private research firms, has identified consumer confidence as one of the biggest issues that will make or break e-commerce.