Sharing economy businesses provide a platform to sell goods or services online and are classified as an “online trader” under the new EU Online Dispute Resolution Platform regulation.
You may need to make changes to your website, and in some cases to your contractual terms, when the new Platform for cross-border consumer claims becomes available for use by traders and consumers on 15 February 2016.
What is it?
The Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015 (the Regulations) introduce to the UK the European Commission’s online dispute resolution platform (the ODR Platform). The ODR Platform is intended to encourage cross-border purchasing by consumers across the EU and is part of the Commission’s Digital Single Market initiative (see our dedicated Digital Single Market hub here).
Online dispute resolution is an alternative dispute resolution (ADR) procedure conducted online. The ODR Platform will provide a portal for consumers to submit a complaint to a relevant, registered ADR provider with the aim of resolving the dispute. It will offer a translation function to help facilitate cross-border disputes. The aim is to make consumers and traders more confident in trading online and across borders. Consumers and traders alike will know that they will have a platform to settle their disputes out of court in a simple, fast and low-cost way.
Who has to comply?
All online traders who sell goods, services or digital content to consumers (or in the words of the Regulations who “intend to enter into online sales contracts or online service contracts with consumers”) via their own website within the EU (with some exceptions, such as “health professionals”) and any online marketplaces (such as eBay).
How do you comply?
- Online traders must provide a link to the ODR Platform on their website. The link should be easily accessible for consumers. A logical place would be alongside existing complaints procedure information on a trader’s website.
- In addition, all online traders must state their email address on their website (an online contact form that does not show the email address is not sufficient to meet this requirement).
- Where a trader is required to use an approved ADR provider (whether by law, by scheme membership or by contract) it must give additional information to consumers. By way of example, telco’s would fall into this category because Ofcom and the General Conditions require that public electronic communications providers are members of one of the two Ofcom-approved ADR schemes.
- Not only must these traders link to the ODR Platform on their website, they must also:
- inform consumers of the existence of the ODR Platform and the possibility of using the platform to resolve disputes;
- include this information in any standard terms and conditions of business; and
- include a link to the ODR Platform in any emails sent to the consumer offering goods or services.
- Where a trader’s internal complaint handling process has been exhausted, the trader must inform the consumer via a durable medium: (1) that it cannot settle the complaint; (2) the details of a competent ADR entity; and (3) whether the trader submits to such ADR.
Does this mean that all online traders and online marketplaces need to use ADR?
No. The Regulations do not oblige traders to use ADR, only to provide notice of the ODR Platform.
How will the ODR Platform work?
- The consumer fills in an online complaint form on, and submits it to, the ODR Platform.
- The complaint is sent from the ODR Platform to the relevant trader, who proposes an ADR entity to the consumer (if applicable). The trader has 10 days to state whether it is either obliged to use a particular approved ADR provider, or if it is not obliged, if it is willing to use one of the approved ADR providers detailed in the message from the ODR Platform.
- If the trader is unwilling to use an approved ADR provider, then the ODR Platform will not be able to process the complaint any further.
- Once the trader has responded to this message the ODR Platform will then send a similar message to the consumer.
- Once (and if) consumer and trader agree on an ADR entity to handle their dispute, the ODR Platform automatically transfers the complaint to that entity.
- If that transfer occurs, the ADR entity handles the case entirely online and reaches an outcome in 90 days.
- It will be apparent from this that if the trader is not willing to use an ADR provider, then the matter does not proceed to ADR – so in that respect, this is not a compulsory regime.
When does this obligation come into force?
The ‘go live’ date for the ODR Platform has been delayed to 15 February 2016 and the requirements will not be enforced until this revised date.
Are there any penalties for non-compliance?
If a trader fails to comply with the information requirements above, trading standards services can apply for a court order requiring them to comply. If the order is not complied with, the maximum penalty is an unlimited fine and two years’ imprisonment.
What legislation underpins this?
- The Alternative Dispute Resolution Directive (Directive 2013/11/EU).
- The Online Dispute Resolution Regulation (Regulation (EU) No 524/2013).
- Alternative Dispute Resolution for Consumer Disputes (Competent Authorities and Information) Regulations 2015.
- Alternative Dispute Resolution for Consumer Disputes (Amendment) Regulations 2015.
For further information:
- The European Commission’s most recent factsheet can be accessed here.
- Business companion guidance here.
- BIS guidance here.
- See our dedicated Digital Single Market hub here.