Also, if there is an ODR service incorporated into the site, a user’s noncompliance with the ODR decisions can be listed publicly to encourage future
compliance and transparency. However, user review systems can also be used
fraudulently.
D. Dispute resolution and enforcement through chargebacks
This fourth example describes the use of credit card companies’ chargeback processes that can at times provide an alternative to dispute resolution and enforcement.
Dutch consumer Pierre orders a sequencer online from Bob’s company and
makes the payment of €400 with his credit card. However, the product never
arrives and Pierre is not able to discuss a settlement with Bob. Pierre then
contacts the credit card company that has issued his card and asks them to
reverse the payment due to non-delivery. The credit card company trusts Pierre’s
description and issues a chargeback that reimburses Pierre’s payment.
In this example dispute resolution and enforcement are organised by a private
third party, the credit card company. The system is funded by payments made by
the sellers to the credit card company and the payment sum varies from seller to
seller depending on how often they have been involved in chargeback procedures. Thus, in addition to providing a redress mechanism, chargebacks enable
steering the future behaviour of sellers. However, chargeback procedures only
enable the reversal of the payment made and they lack any compensation for
damage. Further, their scope of application is limited to specific situations, and
consumers are not necessarily aware of the existence of chargeback procedures.
24
The latter issue could be improved by raising consumers’ awareness. Should the
credit card company refuse the chargeback, the consumer needs to turn to outof-court redress services dealing with financial services.
25
E. ODR and private enforcement on e-commerce platforms
This fifth example describes private dispute resolution and enforcement provided
by an Internet platform based on the platform’s user agreement.
The German sound system expert Bob orders some wires for his home-built
modular synthesiser online from an US-based company, Oscillating Vibes. The
wires, although functioning, are not to Bob’s liking as they are pink and not
black as he supposed them to be based on a listing photo. When no settlement is
reached between Bob and Oscillating Vibes and the company refuses to refund,
Bob decides to settle the issue through the ODR service of the e-commerce site.
After photos provided by Bob are compared to the listing photos, the e-commerce
site decides to refund the cost of the wires and the shipping fees to Bob. Based on
the user agreement, Oscillating Vibes is obligated to reimburse the amount to the
e-commerce site and, if necessary, the sum is then automatically deducted from the
company’s account on the e-commerce site.
In this example, dispute resolution and enforcement are both provided by the
e-commerce site. Both the resolution procedure and the enforcement phase are
Introduction 11
compliance and transparency. However, user review systems can also be used
fraudulently.
D. Dispute resolution and enforcement through chargebacks
This fourth example describes the use of credit card companies’ chargeback processes that can at times provide an alternative to dispute resolution and enforcement.
Dutch consumer Pierre orders a sequencer online from Bob’s company and
makes the payment of €400 with his credit card. However, the product never
arrives and Pierre is not able to discuss a settlement with Bob. Pierre then
contacts the credit card company that has issued his card and asks them to
reverse the payment due to non-delivery. The credit card company trusts Pierre’s
description and issues a chargeback that reimburses Pierre’s payment.
In this example dispute resolution and enforcement are organised by a private
third party, the credit card company. The system is funded by payments made by
the sellers to the credit card company and the payment sum varies from seller to
seller depending on how often they have been involved in chargeback procedures. Thus, in addition to providing a redress mechanism, chargebacks enable
steering the future behaviour of sellers. However, chargeback procedures only
enable the reversal of the payment made and they lack any compensation for
damage. Further, their scope of application is limited to specific situations, and
consumers are not necessarily aware of the existence of chargeback procedures.
24
The latter issue could be improved by raising consumers’ awareness. Should the
credit card company refuse the chargeback, the consumer needs to turn to outof-court redress services dealing with financial services.
25
E. ODR and private enforcement on e-commerce platforms
This fifth example describes private dispute resolution and enforcement provided
by an Internet platform based on the platform’s user agreement.
The German sound system expert Bob orders some wires for his home-built
modular synthesiser online from an US-based company, Oscillating Vibes. The
wires, although functioning, are not to Bob’s liking as they are pink and not
black as he supposed them to be based on a listing photo. When no settlement is
reached between Bob and Oscillating Vibes and the company refuses to refund,
Bob decides to settle the issue through the ODR service of the e-commerce site.
After photos provided by Bob are compared to the listing photos, the e-commerce
site decides to refund the cost of the wires and the shipping fees to Bob. Based on
the user agreement, Oscillating Vibes is obligated to reimburse the amount to the
e-commerce site and, if necessary, the sum is then automatically deducted from the
company’s account on the e-commerce site.
In this example, dispute resolution and enforcement are both provided by the
e-commerce site. Both the resolution procedure and the enforcement phase are
Introduction 11