reimbursed in a dispute. The contractual terms give eBay the right to request
PayPal to remove funds from a seller’s account or charge the amount reimbursed
to the buyer by eBay’s decision from the seller’s payment method.
50 In addition,
the seller has to agree to eBay using other collection mechanisms such as
collection agencies in case they cannot get the reimbursement directly. Based on
eBay.com’s request, PayPal may decide on restricting the user’s funds according
to PayPal policies. This restriction policy of PayPal has been criticised both for its
arbitrariness and its controversial nature.
51
This private enforcement mechanism is directed against the seller. The contractual relationship is stipulated in the user agreement, which grants eBay access
to the seller’s PayPal account. Thus, the contractual terms enable enforcement of
the final decision on the transaction between the seller and the buyer that eBay
renders through its Resolution Center. The final decision is made in eBay’s
Resolution Center through an automated ODR procedure. This means that the
possible claims that can be initiated at the ODR phase are limited to the typical
issues related to e-commerce; the buyer did not receive the item or received an
item that does not match the description, the seller did not receive the payment
or needs to cancel the transaction. In addition to these, some other issues may be
resolved through the Resolution Center. It is noteworthy that automation forms
an integral part of the mechanism, which also explains the huge number of cases
resolved annually.
As is clear from the above, the private enforcement mechanism of eBay and
PayPal is undeniably an economic mechanism created for protecting consumer
trust in the e-commerce market place. It conforms to the rationality of the
markets and we could perceive well-functioning ODR in a similar manner to
advertisements or user reviews. This is further emphasised by the casual wording
of the ODR procedure, which downplays the element of coercion embedded in
the mechanism. However, this is not the sole function of Resolution Center and
Money Back Guarantee.
As it allows the use of force, the Money Back Guarantee conforms to the logic
of the legal system. If a final decision against the seller is rendered by the
Resolution Center, then eBay may demand the transfer of money from the
seller’s PayPal account. Here, eBay both renders the final decision and also
de facto deducts the money, based on the terms in the user agreement. Instead
of underlining this as enforcement, which would be hazardous from the perspective
of separation of powers, this is rephrased as an ‘allocation of liability’, a contractual
matter between the seller and eBay, who had to reimburse the buyer through the
Money Back Guarantee. However, this claim is not credible as a function of
procedural law is inevitably included in the decision of allocating responsibility. If
we consider ODR and private enforcement simply as a matter of contractual law, we
face the danger of making it into a grey area, a legal no-man’s land, where the sole
option of redress is to look into the material legislation of the ODR provider’s place
of domicile. As such redress to state courts would be impossibly expensive, the
argument leaves much to be hoped for. The redress from material legislation is easily
illusionary, if there is no de facto redress mechanism.
Emerging crisis 77
PayPal to remove funds from a seller’s account or charge the amount reimbursed
to the buyer by eBay’s decision from the seller’s payment method.
50 In addition,
the seller has to agree to eBay using other collection mechanisms such as
collection agencies in case they cannot get the reimbursement directly. Based on
eBay.com’s request, PayPal may decide on restricting the user’s funds according
to PayPal policies. This restriction policy of PayPal has been criticised both for its
arbitrariness and its controversial nature.
51
This private enforcement mechanism is directed against the seller. The contractual relationship is stipulated in the user agreement, which grants eBay access
to the seller’s PayPal account. Thus, the contractual terms enable enforcement of
the final decision on the transaction between the seller and the buyer that eBay
renders through its Resolution Center. The final decision is made in eBay’s
Resolution Center through an automated ODR procedure. This means that the
possible claims that can be initiated at the ODR phase are limited to the typical
issues related to e-commerce; the buyer did not receive the item or received an
item that does not match the description, the seller did not receive the payment
or needs to cancel the transaction. In addition to these, some other issues may be
resolved through the Resolution Center. It is noteworthy that automation forms
an integral part of the mechanism, which also explains the huge number of cases
resolved annually.
As is clear from the above, the private enforcement mechanism of eBay and
PayPal is undeniably an economic mechanism created for protecting consumer
trust in the e-commerce market place. It conforms to the rationality of the
markets and we could perceive well-functioning ODR in a similar manner to
advertisements or user reviews. This is further emphasised by the casual wording
of the ODR procedure, which downplays the element of coercion embedded in
the mechanism. However, this is not the sole function of Resolution Center and
Money Back Guarantee.
As it allows the use of force, the Money Back Guarantee conforms to the logic
of the legal system. If a final decision against the seller is rendered by the
Resolution Center, then eBay may demand the transfer of money from the
seller’s PayPal account. Here, eBay both renders the final decision and also
de facto deducts the money, based on the terms in the user agreement. Instead
of underlining this as enforcement, which would be hazardous from the perspective
of separation of powers, this is rephrased as an ‘allocation of liability’, a contractual
matter between the seller and eBay, who had to reimburse the buyer through the
Money Back Guarantee. However, this claim is not credible as a function of
procedural law is inevitably included in the decision of allocating responsibility. If
we consider ODR and private enforcement simply as a matter of contractual law, we
face the danger of making it into a grey area, a legal no-man’s land, where the sole
option of redress is to look into the material legislation of the ODR provider’s place
of domicile. As such redress to state courts would be impossibly expensive, the
argument leaves much to be hoped for. The redress from material legislation is easily
illusionary, if there is no de facto redress mechanism.
Emerging crisis 77