Consumer Adr

CONSUMER ADR ESSAY

Despite formal acknowledgement at a global level of access to justice as pivotal human right, hurdles still remain for EU consumers to enforce their rights in practice. In the Eurobarometer survey 2006, when consumers were asked about the best ways to protect themselves, their right to bring a seller to court occupies the lowest position (17%) along with their right to join other consumers to take sellers to court (13%) . Financial risks, lack of resources or legal expertise and inadequate redress mechanisms are commonly cited reasons for such reluctance. This makes it highly questionable of consumers’ ability to participate in the market confidently. Fortunately, the advent of consumer ADR has alleviated the effect brought by a deficit in access to justice.

This essay seeks to argue three main points. Firstly, member states ought to have a far more ambitious vision for consumer ADR, utilising ADR schemes to provide a wider array of services such as providing consumer advice and improving on market trading conditions. Secondly, the variable quality of ADR entities can only be brought into uniform by the creation of ADR systems in each member states to allow better evaluation of schemes carried out in different countries. Thirdly, it is argued that ADR schemes can collaborate in a harmony way with the courts in resolving disputes.

First published in July 2013, the Directive on Consumer ADR and a Regulation on Consumer Online Dispute Resolution(ODR) obliges EU member states to transpose most of the requirements of the directive into national legislation by 9th July 2015. EU member states must ensure that ADR, provided by a certified ADR body, is accessible for any and all contractual disputes arising in business to consumer (B2C) relationships. In addition, for online sales and service contracts, the European Commission is setting up an online dispute resolution (ODR) IT platform to facilitate communication between parties and a certified ADR provider. It will link all the national ADR bodies and offer a single entry point for all consumer complaints.

A wider objective of economic growth

The ADR Directive intends to provide a comprehensive solution for consumers to access ADR schemes by building on existing schemes available in member states. Member states therefore are required only to create a residual ADR function to include any B2C claim that is not covered by other existing ADR schemes. In addition, a regulatory system has to be established to oversee ADR entities. Those might be the only obligations to be fulfilled by member states, if the Directive were to be implemented literally. Hodges argues that the advantage of the Directive goes beyond that of simply providing a framework for B2C disputes. The wider objective that it could achieve includes an assist in market growth. In order to get there, the ideal ADR scheme should perform three key features: consumer advice, dispute resolution, and collation of market information. However, it is only in ombudsmen schemes that all three functions exist simultaneously. The first and third functions appeal for discussion given that these are uncommon to all types of ADR system.

Ombudsmen schemes generally receive more requests for information or advice than formal complaints on disputes. They reach out to people who are reluctant in lodging claims and provide them with tailored advice before complaints are allocated to formal complaint tracks. The support and conversation at this stage is vital to increase consumers’ trust in the consumer protection environment. More than that, the advices will equip consumers with the information and awareness to prevent unwise purchase from the outset.

An ADR scheme like the ombudsmen that is designed to provide the function of collecting market data could act as early warning functions in the market surveillance and regulatory system. The comprehensive database of disputes will provide intelligence feeds for public enforcement bodies to take the necessary actions, while consumers benefit from information on which they can plan on future rational buying decisions.

A uniform ADR system across the EU

One of the problem that the Directive aims to tackle is the varied quality standard of ADR schemes across member states. In order to see the full potential of the Single Market, ADR schemes must ensure that every consumer in the EU can bring a dispute regardless of the type of transaction they entered into. Under the Directive, ‘certified’ ADR bodies will have to meet quality criteria which guarantee that they operate in accordance to four principles: impartiality, transparency, effectiveness and fairness.

ADR providers in the UK have highlighted the significant gaps in the provision of ADR at a national level. It is perceived that availability of ADR in the UK is patchy and of varying quality. Many of them identified a gap in the basic, low-value retail market, but admit that a general ADR body may be superfluous in the retail industry. As to whether new schemes