Date:

Changes in consumer contracts law

What is happening?

The Online Dispute Resolution platform (ODR platform), established and managed by the European Commission pursuant to Regulation (EU) No 524/2013 (the ODR Regulation), is going live very shortly. The ODR platform gives consumers and traders a quick and easy way to resolve contractual disputes arising from the online purchase of goods and services via alternative dispute resolution (ADR).

Why is it happening?

The ODR Regulation is part of a suite of measures aimed at harmonising consumer laws within the Union with a view to strengthening cohesiveness and competitiveness within the internal market. In particular, the ODR Regulation seeks to address the uneven availability, quality and awareness of simple, efficient, fast and low-cost means of resolving disputes arising from the sale of goods or provision of services across the Union.

Who does this affect?

All online traders and online marketplaces (e.g. eBay and Amazon) who sell goods and/or services (including digital content) through a website to consumers anywhere in the European Union (irrespective of whether there is a cross-border element or it is a domestic transaction). The ODR Regulation also covers traders who offer services via ‘other electronic means’ – this includes social media, email, text messages or telephone.
How does the ODR platform work? Disputes referred to ADR through the ODR platform are dealt with in four easy steps:

  • The dissatisfied consumer fills in and submits an electronic complaint form.
  • The ODR platform sends the complaint to the trader and asks them to propose an ADR provider.
  • Once an ADR provider has been agreed by the consumer and trader, the ODR platform will automatically transfer the dispute to that ADR provider.
  • The ADR provider handles the case entirely online and should reach an outcome in 90 days. (The 90 day period runs from the date upon which the ADR provider receives all the relevant documentation. Complex disputes may take longer to resolve but the ADR provider will let the parties know if this seems likely.)

When is it happening?

The ODR platform is available for use from 15 February 2016.

How do I comply with the ODR Regulation?
You need to include an electronic link to the ODR platform on your website which will enable consumers to submit complaints to the ODR platform. You also need to provide an email address on your website so that consumers have a first point of contact in the event of a dispute – this could be an individual within your organisation or you may wish to set up a shared mailbox specifically to deal with complaints.

The ODR Regulation requires that the link is easily accessible to consumers so you may wish to include both the link and the email address, together with any other contact details and required information (please see below), within your complaints procedure.

Do I have to use the ODR platform?

Unless you are in a regulated sector where the use of ADR is mandatory or your trade association/professional membership requires you to do so, you are not required to use the ODR platform or participate in ADR at all. The introduction of the ODR platform does not prevent you from requiring consumers to get in touch with you first to try and resolve disputes. Many certified ADR providers will in fact require consumers to have attempted to resolve the dispute with you directly before they will progress a complaint.

However, although the ODR Regulation does not make the use of ADR mandatory, all online traders and online marketplaces must make the link to the ODR platform and an email address available. If the trader and the consumer cannot agree on an approved ADR provider within 30 days of the complaint form being submitted, the complaint will not be processed any further.

If you refuse to engage with the process or you cannot agree on an approved ADR provider, the complaint will not be progressed through the ODR platform. The consumer will be given details of an ODR contact point (in the UK this will be the Chartered Trading Standards Institute) to enable them to obtain information on other possible means of redress.

How does the ODR Regulation work with my other legal obligations?

  • If you operate in a sector in which use of a particular ADR scheme is mandatory (e.g. financial services), in addition to include the ODR platform link, you should also provide the consumer with the name and web address of your certified ADR provider on your website (if you have one) and in your terms and conditions. The provisions of the relevant legislation or your trade association are likely to require that you must consent to use ADR with the approved ADR provider. Note that this obligation to include details of the ADR provider applies irrespective of whether you trade online or not.
  • The introduction of the ODR platform does not affect your existing obligation under the ADR Regulations to provide consumers with details of a certified ADR provider in the event that you are unable to resolve a complaint or dispute. This obligation applies to all disputes which are unresolved after 1 October 2015, even if the original contract or the dispute itself arose prior to that date.

Key risks:

  • If you ignore these requirements, you could be liable to enforcement action by Trading Standards. This could result in a court order requiring you to comply with the applicable legislation. Failure to do so could result in an unlimited fine or up to two years in prison.
  • ADR is generally seen as a less time-consuming and less costly alternative to court proceedings. As ADR becomes more frequently used and consumers become more aware of it, an unwillingness to participate in ADR (even if you have complied with your regulatory obligations) may become a reason for consumers to shop elsewhere.
This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

Debra Coady

Senior Associate

I act on a wide range of commercial matters and have a particular specialism in IT and outsourcing contracts.

Catherine Harrison

Senior Associate

I am a Senior Associate at DWF, specialising in working for clients across the retail, food, education, oil and gas and technology sectors.