Implementation of Online Dispute Resolution by E-Commerce Platforms in India

Introduction

The revolution of E-commerce has transformed the means of business done across India. The industry’s growth is owed to the rise in internet and smartphone penetration, driven by the ‘Digital India’ programme. The Indian E-commerce market anticipates a projected growth of USD 111.40 billion by 2025 from US$ 46.2 billion as of 2020. The E-commerce industry has directly impacted micro, small & medium enterprises (MSME) in India by financing technology and training, thereby having a favourable cascading effect on other sectors. The E-commerce industry in India has been on a bullish growth and is anticipated to surpass the USA to become the world’s second-largest E-commerce market by 2034. Technology-induced reforms such as digital payments, hyper-local logistics, analytics-focused customer engagement and digital advertisements have fostered the growth of E-commerce platforms. Online Dispute Resolution (ODR) is a mechanism that incorporates technology to facilitate alternative dispute resolution procedures like negotiation, mediation and arbitration. ODR carries the potential to address a broad spectrum of issues, and the system can take diverse roles that vary in automation and human supplementation. Redress concerning issues arising from transactions on E-commerce platforms serves as an essential component of consumer confidence and trust. Setting up an effective redressal mechanism to maximise the number of successful transactions instead of solving a high volume of complaints helps retain a significant number of customers on E-commerce platforms.

Need for Implementing ODR in E-Commerce

The data provided by the Ministry of Consumer Affairs, during April 2020-February 2021, consumers have reported 1,88,262 disputes concerning transactions on E-commerce platforms. At 22%, this share was highest amid the five sectors, which include banking, telecom, electronic products and consumer durables. Currently there exists 5,54,925 pending cases in the National State and District Commissions combined, in contrast to the limitation set by the Consumer Protection Act of 1986 that mandates disputes to be settled within 90–150 days . Today several companies have opted for the use of ODR as means of dispute resolution. Companies such as eBay, PayPal, and ICANN are the front runners in implementing ODR mechanisms. ODR not only helps improve the accessibility of law to consumers affected in an E-commerce dispute but also strengthens their trust in E-commerce transactions and acts as a driving force for an effective redressal. ODR has received significant attention globally for its ability to minimise cost and save time, and in addition, it is seeing rapid implementation by E-Commerce platforms worldwide. A neutral process providing consumers and sellers prompt decisions in times of need is one such essential facet of ODR.

Companies Implementing ODR

The ODR system employed by e-Bay is a high volume process that approaches disputes from a systems outlook. This mechanism handles over 60 million disputes in a year, including issues like “item not received,” “item not as described,” and “unpaid item.” The ODR mechanism incorporates various types of Computer-Mediated Communications (CMC), which challenges the boundaries of conventional ADR approaches and its purposeful design can be used by both buyers and sellers. The five-tiered system of e-Bay’s Resolution Center, diagnoses the problem to ensure it falls within the ambit of Money-Back Guarantee by asking the consumer a series of questions and ensuring the complaint is registered within 30 days of the actual date of delivery. The Center then deduces a resolution and connects the two parties through their messaging platform. Supposing that does not resolve the dispute within three working days, the claimant can escalate the case back to the Center for an evaluation, who then contact the Buyer within 48 hours to determine whether the complaint qualifies for a refund.

In 2010, PayPal and eBay studied the behaviour of consumers’ before and after participating in their resolution process. The study highlighted the consumers’ preference when it comes to finding a resolution. Consumers prefer to lose their case as quickly as possible rather than the process be extended. This research introduced PayPal’s two-tiered ODR system, an interesting facet of this system is that only sellers’ can appeal during the process. The system focuses on Disputes and Claims the two tiers, once a buyer opts for the dispute resolution process, the transaction in dispute is put on hold until the issues are resolved. PayPal then inquires an explanation from the seller, after which the buyer and seller are given 20 days to find a resolution. If within 20 days a resolution is not found, either party can escalate the dispute to a claim where PayPal will investigate and determine an outcome.

Conclusion

There is increasing global momentum behind ODR, where consumers and business groups unanimously support and promote the idea of using the ODR mechanism due to its cost-effectiveness and time-bound redressal system. As a result, there is an increasing demand for effective ODR systems with designs and procedural rules that cater for a variety of disputes. Taking into consideration the exponential rise in online cross-border transactions and the need for mechanisms that help resolve disputes that may arise from the same, organisations like the UNCITRAL have provided technical notes to assist States in the effective implementation of ODR in developing counties. E-commerce platforms in India must take inspiration from the efforts of e-Bay and PayPal to help develop a system that can effectively cater to the Indian market and provide consumers a safe and fair experience online with effective dispute resolution tools.

Author’s Byline:-

Reyhan Sujith is a third year law student pursuing a degree in BBA LLB at Christ (Deemed to be University). The article authored by him talks about Online Dispute Resolution, its necessity in the E-Commerce platforms and successful implementing of ODR mechanisms by eBay and PayPal.