Encourage the use of in-house customer satisfaction programs
As a first and preferred remedy in any dispute, Internet customers should be offered access to in-house customer satisfaction systems. Depending on the type of transaction and the nature of the system, such approaches may serve as a valid alternative to ADR. For example, a merchant involved in the sale of low-priced merchandise might choose to offer an unconditional money-back guarantee to all customers rather than establishing an ADR system. In any event, it appears advisable to request that customers direct any complaint first to an in-house customer satisfaction system prior to taking advantage of any ADR mechanism.

Propose the possibility of ADR
Unless full customer satisfaction is guaranteed by in-house systems, customers of merchant websites used for B2C transactions should be notified that the merchant is ready to submit disputes resulting from online transactions to one or more specified ADR systems. Information about dispute resolution via ADR should be provided as a part of the overall information, perhaps in the framework of a reference to a code of conduct (Trustmark) or as a part of the general sales conditions.

ADR should be presented as a voluntary option for consumers if a dispute arises, not as a contractual obligation.

Binding Arbitration
Merchants should generally avoid using arbitration that is binding on consumers because it may impair consumer confidence in electronic commerce. Arbitration that is binding on merchants as an obligation of membership in a trustmark program, on the other hand, serves to promote consumer confidence in electronic commerce. Arbitration that is binding on consumers should only be used in limited circumstances, and where it clearly meets the criteria of impartiality, transparency and public accountability. Consumer decisions to engage in binding arbitration must be fully informed, voluntary, and made only after the dispute has arisen.

Inform about conditions of ADR
Potential customers should be informed about the conditions of access (online or other), the cost (free of charge, nominal fee, cost borne by the merchant, etc.), the legal nature of the ADR (arbitration, mediation, conciliation, negotiation, etc.) and of its outcome (binding/not binding/binding for the merchant; enforceable), and recourse to other instances, notably to law courts.

No Retaliation
Merchants should not take any retaliatory action against customers because they have initiated contact with an ADR service concerning a dispute.

Recommendations To ADR Service Providers

Impartiality
The ADR personnel must be impartial, in order to guarantee that decisions are recognized as being made independently, thus strengthening the reputation and credibility of the organization providing ADR. Impartiality must be guaranteed by adequate arrangements, which may include measures such as the establishment of appropriately composed supervisory bodies or the appointment of dispute resolution officers according to specific criteria. The governing structure of the ADR service should be designed so as to ensure neutrality in all respects.

Dispute resolution personnel must be insulated from pressure to favor merchants or consumers in resolving disputes. When the amount in dispute is important and/or when ADR is finally binding for both parties, even higher standards of transparency should be respected, including e.g. that the names of dispute resolution officers are made known to the parties, who should have the right to challenge them for cause. When a merchant uses a particular arbitration service repeatedly, to the extent practicable, the ADR officers who handle the disputes should be rotated to ensure their continued impartiality.

Qualification of ADR officers
Dispute resolution officers should have sufficient skills and training to fulfill the function in a satisfactory manner. Formal lawyer qualification and license should not be required.

Accessibility and Convenience
ADR systems must be easily accessible from each possible country. Online access might be the preferred choice. Requirements about the form of the submission of a case should be kept to the necessary minimum. Customers should receive maximum guidance in filling in and filing submissions. Appropriate solutions must also be found for any problems that may result from different languages used by the merchant, the ADR service provider and the customer.

Speed
To be effective, ADR systems must resolve disputes quickly if they are to meet the needs of both consumers and businesses. In any case, they must be speedier than courts in providing satisfactory results.

Low cost for the consumer
The ADR service should be provided to the consumer at no or only moderate cost, while taking into account the need to avoid frivolous claims. An impartial screening process provided by the ADR system could do this. Prior submission of a complaint to a customer satisfaction program will also permit an early assessment of the real nature of the claim.

In fact, the cost of ADR will be significantly lower for both consumers and businesses than formal administrative or legal actions. This is particularly true when costs are calculated in terms of both time and money and where formal actions involve time-consuming depositions, hearings, legal representation, and personal appearances requiring international travel.

Transparency
ADR systems should function according to published rules of procedure that describe unambiguously all relevant elements necessary to enable customers seeking redress to take fully informed decisions on whether they wish to use the ADR offered or address themselves to a court of law.

To ensure credibility and acceptance of an ADR system, information should include:

• the types of dispute which may be referred to the body concerned, as well as any existing restrictions in regard to territorial coverage and the value of the dispute;
• the rules governing the referral of the matter to the body, including any preliminary requirements that the consumer may have to meet (e.g. to attempt first to get redress through a customer satisfaction system offered by the merchant), as well as other procedural rules, notably those concerning the written or oral nature of the procedure, whether it is conducted exclusively or partly online, whether oral hearings are possible or required (separate of either party or jointly), attendance in person or possibilities of representation, and the languages of the procedure;
• the decision-making arrangements within the body and its governing structure public listing of its personnel, the selection process of dispute resolution officers for individual cases and the possibilities of challenging them by the parties;
• the possible cost of the procedure for the parties, including rules on the award of costs at the end of the procedure;
• the type of rules serving as the basis for the body's decisions (legal provisions, considerations of equity, codes of conduct, etc.);
• the manner of proceeding, whether decisions are made public, confidentiality of the handling of submissions and of proceedings;
• enforceability of agreed upon resolutions and any other possibilities of recourse.

The ADR provider should publish an annual report enabling a meaningful evaluation of all ADR cases and results, while respecting the confidential nature of specific case information and data. Such evaluation should include - at a minimum - an aggregated list of cases received, cases settled prior to ADR resolution, cases settled by ADR resolution and cases not resolved. To the degree possible, such report should include information on whether cases settled prior to, and at settlement, were to the advantage of the consumer or the merchant. In cases where arbitration is binding on one or both of the parties, information should be available to the public about the identity of the merchant, the type of dispute, and to the degree possible, whether the dispute was resolved in favor of the merchant or the consumer.

Principle of representation
The ADR procedure should not deprive the parties of the right to be represented or assisted by a third party at all stages of the procedure.

Applicable Rules
One of the principal reasons why business, consumers and governments consider the development of ADR systems to be of such strategic importance for the enhancement of consumer trust in electronic commerce is that such systems can settle disputes in an adequate fashion without necessarily engaging in cumbersome, costly, and difficult research on the detailed legal rules that would have to be applied in an official court procedure. Governments in particular, must be confident that the rights of both consumers and businesses are protected, while at the same time avoiding actions that could adversely impact the growth of global electronic commerce.

ADR dispute resolution officers may decide in equity and/or on the basis of codes of conduct. This flexibility as regards the grounds for ADR decisions provides an opportunity for the development of high standards of consumer protection worldwide.

Consumer Awareness
Except in special cases where both consumers and merchants find special circumstances to agree to arbitration (see below), consumers will not alienate their right to go to court by electing to use an ADR mechanism.

ADR should be presented as a voluntary option for consumers if a dispute arises, not as a contractual obligation. Thus, an arbitration decision taken by the dispute resolution officer(s) may be binding on the parties only if they were informed of its binding nature in advance and accepted this. Equally, the merchant shall not seek a commitment from the consumer to use binding arbitration prior to the materialization of the dispute, where such commitment would have the effect of depriving the consumer of the right to bring an action before the courts.

Referrals to law enforcement
ADR service providers should refer disputes to the relevant law enforcement authorities, with the consumer's permission, when they have reason to believe that there may be fraud, deceit or patterns of abuse on the part of the Internet merchant. In such cases, the merchant should be informed that such an action has been taken.

Recommendations To Governments

Studies on the legal frameworks for ADR have demonstrated that they are fragmented between international conventions and legal instruments at several levels (federal/state, community/national, etc.). As a consequence, ADR systems conceived for worldwide application must respect a number of - not always compatible - conditions. Several of these elements can be easily accommodated, like the requirement that a valid agreement to submit a dispute to ADR would have to be entered into only after the dispute has arisen. Other elements are more problematic to accommodate, e.g. that certain national laws on encryption or authentication inhibit the proper level of confidentiality and security in online proceedings, or that some national laws do not permit the conclusion of contracts online.

On the other hand, many governments are on record that they share the GBDe position that ADR is an essential element for the proper functioning of e-commerce and for the enhancement of consumer confidence in this medium. Hence, the GBDe expects governments to adopt policy stances in line with this goal.

International rules on competent forum and applicable law
Although ADR can provide appropriate solutions for many disputes, it must be recognized that even in the most ideal of worlds a certain number of disputes will still end up in court. Therefore, and also because these questions may still be posed in some ADR systems, the GBDe wishes to state clearly that questions of jurisdiction and applicable law in electronic commerce still need to be dealt with urgently and in a manner that encourages both business investment and consumer trust in electronic commerce. The GBDe position on this was expressed in the "Paris Recommendations" of the "Jurisdiction" Working Group in 1999.

Encourage the use of customer satisfaction systems and of ADR
Actively promote public awareness of ADR systems and their role in resolving business-to-consumer commercial disputes. Acknowledge the continuous efforts by companies to set up customer satisfaction systems, which should be used first before starting either ADR or court proceedings against a merchant. Likewise, policies should encourage consumers to use available ADR systems instead of or before seeking recourse to courts.

Education and Training
Support and promote educational activities of ADR officers by ADR system providers.

Encourage effective ADR systems
It is our recommendation that governments encourage customer satisfaction systems as a first step in the chain of redress prior to resorting to ADR's. Governments should promote and facilitate the development of high quality ADR services that are independent, transparent cost-effective, flexible and accountable to the public, without discriminating among impartial services solely on the basis of who offers them. Achieving a sustainable level of competition among ADR providers and achieving reciprocal agreements among these should be a priority.

As with any decision to introduce regulation, the decision as to whether and how to adopt government accreditation proposals should only be pursued after careful consideration and balancing of interests. The development of accreditation systems must take into account the interests of consumers and businesses for fair, transparent and cost-effective processes and the overall objective of the successful development of electronic commerce.

Any government-backed assessment rules should be developed with input from consumer groups, businesses and other stakeholders. To the extent possible this should be coordinated with similar efforts in other countries and regions to ensure a high degree of harmonization between assessment efforts to promote the development of international principles and rules including self-regulatory codes. Independent assessment and ratings systems may also help promote consumer empowerment.

ADR on the basis of equity or codes of conduct
Allow ADR systems to function on the basis of equity, or codes of conduct. It should not be required that dispute resolution officers necessarily have formal lawyer qualification and license. In some countries, mediation/arbitration processes are legally regulated to be conducted solely by licensed lawyers, but deregulation and an appropriate legal framework should be aimed for.

Global access to and application of ADR
Promote the development of globally applicable ADR systems, and take an international perspective on ADR by working with other governments and international organizations.

Application of modern technologies in ADR
Refrain from creating obstacles for the innovative use of technology to settle consumer disputes and eliminate obstacles, resulting primarily from legislation on authentication and security, to the application of an appropriate level of confidentiality and security in online ADR.

Procedural and form requirements for ADR should be kept to a minimum
Eliminate requirements in some legislation that ADR must follow nearly the same procedural requirements, as the court system. The same applies to certain form requirements that may impede the use of ADR in the online context. The parties to an ADR case should be free to structure the proceedings, as they desire, as long as there is full transparency and information about the consequences.

Adjust offline ADR requirements to the online context
Remove inhibitions in national legislation or international conventions to conclude contracts - including dispute resolution clauses - online and adjust existing legal and political frameworks for offline ADR to online requirements.

Policy cooperation between public and private sector
Ensure close cooperation between the public and private sector to maintain a balance in achieving a satisfactory variety of ADR systems, which reflect consumer and business needs and are easily understood by the customer.

Enforcement Actions
Take appropriate enforcement action when ADR services do not comply with their stated policies and procedures.