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March 2011 Contribution to the European Commission’s Public Consultation The use of alternative dispute resolution (ADR) as a means to resolve disputes related to commercial transactions and practices in the EU About eBay Founded in 1995, eBay Inc. connects hundreds of millions of people around the world every day, empowering them to explore new opportunities and innovate together. eBay Inc. does this by providing the Internet platforms of choice for global commerce and payments. Since its inception, eBay Inc. has expanded to include some of the strongest brands in the world, including eBay, PayPal, Marktplaats, StubHub, Shopping.com, and others. eBay Inc. is headquartered in San Jose, California. Our contribution to this consultation focuses on our EU e-commerce platforms. eBay aims to create, maintain and expand the functionality, safety, ease-of-use and reliability of its online commerce platforms while, at the same time, supporting the growth and success of its community of users.

SUMMARY AND KEY MESSAGE eBay welcomes this opportunity to share with the European Commission our views and experience with regard to effective dispute resolution. eBay firmly believes that online dispute resolution mechanisms can give consumers an efficient and straightforward means to safeguard their rights. Our positive experience with our own systems means we continue to promote - and where possible improve – our tools, which remain popular with both buyers and sellers on our platforms. We believe there are, at least, three elements of successful dispute resolution. First, the dispute resolution mechanism is there for the use of both buyers and sellers / consumers and businesses. Second, most problems are best resolved with early and direct communication between the trading partners. Third, there are major advantages with an online dispute resolution mechanism for reasons of practicality, effectiveness and cost. It is crucial that the European legal landscape allows for private internal dispute handling systems and refrains from imposing a straightjacket. Here, we believe the current framework of two Commission Recommendations setting out minimum guarantees is satisfactory. It has the necessary flexibility so that ADR or ODR systems can be set up by industry internally to provide for quick and simple resolution, can be adapted to the specific disputes and can be further developed based on experience. Indeed, policy efforts to encourage consumers and traders to use ADR must promote and endorse existing systems, including internal industry schemes. eBay would therefore caution against efforts that mandate adherence by traders or consumers to a particular ADR scheme or make the use of certain ADR schemes a mandatory first step before court.

eBay EU Liaison Office – 44 Avenue des Arts, B-1040 Brussels Tel: +32 (0)2 788 97 14 – Fax: +32 (0)2 788 97 50 – www.ebay.eu


ELEMENTS OF SUCCESSFUL DISPUTE RESOLUTION Dispute resolution is there for both consumers and businesses The Consultation Paper rightly recognizes that access to efficient means to resolve disputes and obtain compensation promotes consumer confidence in the market. We would add that a trustworthy and accessible dispute resolution system promotes market confidence also for businesses. The 2007 study by the University of Leuven1 stressed that businesses must also be seen as users of dispute resolution systems. Indeed, the Commission’s 2009 report on cross-border e-commerce identified how potentially higher cost involved in resolving complaints and conflicts cross-border compared to domestically was a factor holding back businesses from selling across borders. The business stakeholders that contributed to the report pointed to the difficulties of providing after-sales service, customer support, complaint handling and dispute settlement in another country. Indeed, they suggested that because of the challenges linked to providing a high level of customer service in another country, most online sellers that are serious about addressing a given market will ultimately seek to establish a physical presence in the destination country, in one form or another (either by setting up a call centre or a warehousing facility). To take our own Online Dispute Resolution (ODR) mechanism as an example: It is available to all users of the eBay marketplace: buyers, sellers, businesses and consumers, and it thereby promotes confidence that in turn enables transactions to happen. Communication is key for solving disputes We share the Commission’s view that active participation of consumers in the functioning of markets helps protect healthy competitive conditions. The eBay Community is a great means to that end. The eBay Community encourages Bay members to learn about their trading partners, to get help from other members, to discuss topics amongst them, etc. This allows for more informed purchasing decisions and goes some way to nip disputes and conflicts in the bud. The 2007 Leuven study found that direct negotiation – and internal complaint handling schemes – can play a significant positive role in allowing consumers to make a complaint to a business (with a mechanism for the business to respond), in an inexpensive, rapid and generally efficient manner. In fact, the study points to empirical research showing that direct negotiations between consumers and businesses are by far the most popular form in which consumer complaints are made. Our experience confirms that finding. Most problems are best resolved with early and direct communication between the buyer and the seller. We concur with the Leuven study that in most circumstances the interests of a (good faith) consumer are identical or at least very similar to the interests of a (good faith) business. Dialogue is therefore the first step towards solving buying or selling issues on the eBay platform. Here, eBay offers basic advice about how to communicate effectively with the trading partner. 1

Carried out for the European Commission, entitled “An analysis and evaluation of alternative means of consumer redress other than redress through ordinary judicial proceedings”, January 2007. 2 eBay EU Liaison Office – 44 Avenue des Arts, B-1040 Brussels Tel: +32 (0)2 788 97 12 – Fax: +32 (0)2 788 97 50 – www.ebay.eu


If the seller or buyer is not able to work things out directly with the trading partner, he or she can – as a second step - open a case in the Resolution Center. eBay will then contact the trading partner and help both parties discuss, track and resolve the case. Online Dispute Resolution for practical and efficiency reasons We see major advantages with ODR systems – compared to (offline) ADR systems - for reasons of practicality and efficiency. Here we would in particular echo the findings of the 2007 Leuven study: • In ODR, the procedure can be initiated and exercised from any location. The only condition is that parties have access to the internet. In an international context this is a major advantage. • The speed of communication is extremely high, both in relation to discussions and document exchange. This keeps the procedure short, often even shorter than in normal ADR. Where hearings can be left aside, small value claims can especially be dealt with fully online in a quick and effective manner. • Procedural costs can be kept relatively low. This feature is however not absolute, as in online mediation for example, the mediator can ask a large fee. RECOMMENDATION We believe that it is crucial that the European legal landscape allows for private, internal dispute handling systems without imposing a straightjacket. We believe the current framework of two Commission Recommendations setting out minimum guarantees is satisfactory. It has the necessary flexibility so that ADR or ODR systems can be set up by industry internally to provide for quick and simple resolution, can be adapted to the specific disputes and can be further developed based on experience. Indeed, policy efforts to encourage consumers and traders to use ADR systems must promote and endorse existing systems, including internal industry schemes. eBay would therefore caution against efforts that mandate adherence by traders or consumers to a particular ADR scheme or make the use of certain ADR schemes a mandatory first step before court.

For further information, please contact: Hanne Melin, Legislative Counsel Europe, eBay T: +32 (0)2 788 97 15 E: hmelin@ebay.com

3 eBay EU Liaison Office – 44 Avenue des Arts, B-1040 Brussels Tel: +32 (0)2 788 97 12 – Fax: +32 (0)2 788 97 50 – www.ebay.eu


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