Lessons and Best Practices for Designers of Fast Track, Low Value, High Volume Global E-Commerce ODR Systems

The momentum behind development of global online fast track low value high volume dispute resolution (hereafter ODR) continues to accelerate. Consumer and business groups around the world are promoting fair, proportionate, effective, online, fast track redress for low value high volume cross border e-commerce disputes. As a result, there will continue to be increasing demand for a variety of effective ODR systems design and procedural rules. Best practices developed by entities like eBay and lessons learned from the work of UNCITRAL Working Group III can * The beginning of this article addressing “Low Value Parameters” and “Limiting Types of Claims” was presented as a paper, authored by Louis F. Del Duca, Colin Rule, and Kathryn Rimpfel, entitled eBay’s De Facto Low Value High Volume Fast Track Resolution Process: Lessons and Best Practices for ODR Systems Designers,6 Y.B.Arb. & Mediation 204 (2014) at the 17th Biennial Meeting of the International Academy of Commercial and Consumer Law held 16-19th July 2014 at the Istanbul Bilgi University in Turkey. We expand and update the earlier version with a discussion of eBay’s Automated Trustmark Evaluation/Feedback system and Private Enforcement of Settled Claims and Rulings of Neutrals system. † Before this article could be published, Professor Del Duca passed away unexpectedly in November, 2015. This publication has been dedicated to his memory by his colleagues and this Journal. ** Louis Del Duca is the Edward N. Polisher Distinguished Faculty Scholar Emeritus at the Penn State Dickinson School of Law. Colin Rule is formerly Director of Online Dispute Resolution for eBay and PayPal and presently CEO of Modria.com. Brian Cressman, The Penn State Dickinson School of Law, J.D. 2015. We wish to express thanks for the research assistance in preparation of this article to Kathryn Rimpfel, The Penn State Dickinson School of Law, J.D. 2014; Lina Ali, Research and Teaching Assistant, University of Basel, Switzerland; Jeremy O’Steen, The Penn State Dickinson School of Law, J.D. 2014; John Pokiniewski, The Penn State Dickinson School of Law, J.D. candidate 2016; Philip Reinhart, The Penn State Dickinson School of Law, J.D. candidate 2016; and Maureen Rostad, The Penn State Dickinson School of Law, J.D. candidate 2017. 2015 Del Duca, Rule, & Cressman 4:1 243 be helpful in developing framework models for fast track low value high volume e-commerce ODR systems. E-commerce ODR systems like eBay’s provide a marketplace for e-commerce as well as an electronic system for fast track resolution of disputes which arise on their e-commerce marketplace. Ordinary ODR systems do not provide an e-commerce marketplace but only provide for resolution of disputes. Accordingly, best practices developed by eBay’s e-commerce ODR system discussed in this article are generally applicable and needed by e-commerce ODR systems, but generally inapplicable and not needed by ordinary ODR systems. This article addresses development by eBay of its highly successful fast track low value high volume e-commerce ODR system by application of the following four best practices: (i) Low Value Parameters: Adoption of a generally applicable de facto low value workable monetary “standard” (for example, the Purchase Price “Money Back Guarantee” discussed infra) rather than a “numeric” (i.e. $15,000) monetary description for disputes which are eligible for resolution on the providers’ platforms facilitates global development of fast track low value high volume ODR systems. A $15,000, $10,000 or $5,000 monetary ceiling for low value disputes might constitute low value in a developed economy. It will not in an underdeveloped economy. Hence the need for a low value workable monetary “standard” rather than an unworkable “numeric” monetary description. As indicated, the eBay Purchase Price “Money Back Guarantee” cap on the amount of a permissible claim provides a workable standard in developed and underdeveloped economies. *** (ii) Limitation of Types of Claims: Leaving resolution of disputes involving high value and complicated legal issues to other forums, *** The eBay system combines general use of a “monetary standard” with a “numeric description” of low value for specific categories of goods. This article also notes the flexibility of eBay’s system in responding to market developments by creating actual numeric ceilings for disputes pertaining to equipment and vehicle categories of purchases which also are deemed to be suitable and therefore eligible for resolution on eBay’s ODR platform. Adjusting to market developments since the launch of its original dispute resolution system, eBay has added resolution platforms specifically dedicated to categories of purchases, including the (Vehicle Purchase Protection [hereinafter VPP] and Business Equipment Purchases Protection [hereinafter BEPP] programs which require vehicle claims to be more than $100 and less than $50,000 and equipment claims to be more than $1000 and less than $20,000. Based on the eBay Fast Track Low Value experience, therefore, an ODR Best Practice is to build the basic low value system (i.e, “Money Back Guarantee”) as needed, and as market conditions mandate, customize resolution and protection programs specifically designed to address individual categories of disputes. For more on eBay’s VPP and BEPP programs, see Purchase Protection Systems For Specific Categories of Goods – Maximum and Minimum Purchase Price Limits on the Amount in Controversy (discussion at Section II.3, infra). General Electric’s Oil and Gas Division has experimented with online resolutions for commercial conflicts, as detailed in Vanessa O’Connoll, At GE, Robo-Lawyers, WALL ST. J., 2015 Penn State Journal of Law & International Affairs 4:1 244 eBay’s fast track ODR eligibility requirements also limit the complexity and scope of permissible claims (i.e. claims eligible for resolution on its platform) by giving buyers a “Money Back Guarantee,” which, as noted supra, caps the amount a buyer may claim to recovery of purchase price paid, and also limits the types of claims to “Items not received” or “Items not as described.” These limitations on the amount and types of claims permitted facilitate fast track and fair resolution of disputes and enables eBay to handle 60,000,000 e-commerce disputes annually averaging $70-$100 in value. (iii) Buyers’ On-Demand Access to Automated Trustmark Evaluation/Feedback Information Needed to Identify Reliable Sellers: Vital to facilitating e-commerce between buyers and sellers, often in different parts of the world and speaking different languages, is developing trust between buyers and sellers to give them the confidence they need to enter into electronic transactions. eBay’s solution to developing this trust between buyers and sellers is the Automated Trustmark Evaluation/Feedback System. This system enables buyers involved in electronically purchasing low value high-volume items to quickly identify on demand a reliable seller without doing extensive research. Buyers seeking to make purchases using the eBay platform are able to assess the reliability of sellers with whom they anticipate doing business based on ratings and feedback derived from performance data supplied electronically by previous buyers after each transaction they completed on the eBay platform. (iv) Private Enforcement After discussing (i) Low Value Parameters, (ii) Limitation of Types of Claims, and (iii) Buyers’ On Demand Access to Automated Trustmark Evaluation/Feedback Information Needed to Identify Reliable Sellers, we address (iv) Private Enforcement measures available to enforce settled claims and rulings of neutrals to successfully implement fast track low value high volume e-commerce systems. http://www.wsj.com/articles/SB10001424052970203633104576620902874155940 . This program focuses on disputes for less than 50,000 Euros. 2015 Del Duca, Rule, & Cressman 4:1 245 TABLE OF CONTENTS I. ACHIEVING “LOW VALUE” PARAMATERS ............................... 247 A. eBay’s De Facto “Low Value” ..................................... 247 II. LIMITING TYPES OF CLAIMS .................................................... 250 A. Buyers’ Claims – “Item Not Received,” “Item Not as Described” .................................................................... 252 B. Sellers’ Claims – “Final Value Fee”........................... 254 C. Maximum and Minimum Purchase Price Limits for Certain Categories of Goods .................................... 255 III. FACILITATING FAST TRACK RESOLUTION OF DISPUTES – COMBINING USE OF LOW VALUE PARAMETERS & LIMITING TYPES OF CLAIMS. ............................................. 264 A. Lists of “Item Not Received” and “Item Not as Described” Claims ....................................................... 264 1. EBay Explicit Limitation of Types of Claims and List of Specific Claims – Consequential Damages Excluded by “Money Back Guarantee” ............. 264 B. Comparison of Selected eBay Best Practices and the UNCITRAL Draft ....................................................... 265 IV. LESSONS AND BEST PRACTICES REGARDING DE FACTO PURCHASE PRICE “MONEY BACK GUARANTEE” LOW VALUE & LIMITATION OF TYPES OF CLAIMS PERMITTED. .......................................................................... 269 V. BUYERS’ ON DEMAND ACCESS TO INFORMATION NEEDED TO IDENTIFY RELIABLE SELLERS ...................................... 271 A. Evaluation of Sellers and Ratings – Building Trust 271 VI. THE EBAY AUTOMATED TRUSTMARK EVALUATION/FEEDBACK SYSTEM ................................... 272 A. Importance of Making Seller Evaluations and Ratings Available to Foster Trust Between Buyers and Sellers and Facilitate Private Enforcement ........................... 272 B. “Percentage”, “Score”, and “Comment Feedback” 274 C. “Description”, “Communication”, and “Shipment”, Detailed Seller Ratings ................................................ 276 D. Transaction Defect Rate ............................................. 279 VII. AWARDING OF EBAY’S AUTOMATED TRUSTMARKS USING THE EVALUATION/FEEDBACK SYSTEM ........................... 280 A. PowerSeller Designation Requirements and Benefits .......................................................................... 28