What are the results of a study on alternative dispute resolution between consumers and traders?

We have already published the upcoming changes to Directive 2013/11/EU on Alternative Dispute Resolution (ADR) between consumers and traders.

Before arriving at these proposals, the European Commission conducted a large-scale survey in EU member states from April 2022 to June 2022.

The survey questionnaire consists of 14 questions focusing on the following topics:

• Respondents' experience of online retail as consumers and traders in 2021.
• Respondents' overall awareness of dispute resolution mechanisms available to consumers and traders
• Respondents' views on the role of public authorities in the context of business-to-consumer (B2C) cross-border commercial activities.

A total of 121 responses were given to the survey.

Profile of respondents

Consumers and organizations representing their interests participated the most in the survey. The survey questions were also answered by NGOs, academic/research institutions and public organizations or bodies not affiliated with the ADR.

Respondents came from a total of 23 countries, representing 19 EU Member States, Iceland, Norway, the United Kingdom and the United States. The highest number of responses in all categories of respondents was received from Belgium (16), followed by Germany and the Netherlands (15 each). There were no responses from Croatia, Denmark, Estonia, Lithuania, Luxembourg, Romania and Slovenia.

The Online Retail Experience in 2021

The majority of respondents across all stakeholder categories (45; 60%) purchased goods or services online more than 10 times in 2021.

Only 4 (5%) of the consumers indicate that they have never purchased goods or services online in 2021.

However, among the 8 traders who responded, 3 (38%) reported that online transactions accounted for less than 20% of their 2021 turnover figures.

Experience with consumer disputes and use of ADR/ODR

What is ODR? ODR stands for online dispute resolution i.e. alternative dispute resolution that takes place in an online environment, such as in the NAIS ADR Center.

Half of all respondents (62) reported having a consumer dispute (namely, a complaint they had to escalate to a third party) in 2021.

In all categories of respondents, the majority answered that when they had a conflict, in 2021, they turned to an out-of-court option (namely a neutral third party such as arbitration, ombudsman, mediator).

According to the survey results, compared to consumers, traders are more likely to use the services of a lawyer to deal with a dispute.

In all categories of respondents, the majority indicated that they know and would use ADR again. However, consumers’ views are more negative than those of ADR structures and traders, as nearly one fifth are not interested in using ADR again for dispute resolution.

71 (61%) respondents across all stakeholder categories considered the availability of support for the ADR process for consumers to be the primary driver when deciding to engage in ADR for dispute resolution.

When using the EU's ODR platform, 90 (74%) of all respondents said they would not use it or have no interest in using it again to resolve a dispute, or that they were not even aware of its existence.

Promotion of ADR

According to 75 (64%) of the respondents, the best way to inform about ADR systems is a national/European-wide campaign focused on ADR, using communication channels such as social media, TV/radio, newspaper or dedicated consumer Rights campaign covering multiple media.

Challenges associated with ADR

Respondents were asked to select up to 5 main challenges that hinder the use of ADR by consumers and traders in their country. 68 (58%) of the respondents choose as the biggest challenge the lack of awareness about ADR as a mechanism for seeking rights and compensation.

Two other challenges, according to 48 (40%) of the respondents, considered significant for the use of ADR are the reluctance of traders to use ADR and difficulties in understanding the process.

The least mentioned were the claims regarding the lack of independence of ADR structures, the cost of ADR to consumers and the preference to use courts as more reliable mechanisms.

At the NAIS ADR Center, the dispute resolution procedure is free for users and is paid for by the trader.

Use of mechanisms other than ADR

The use of consumer organizations for consumer dispute resolution is an option valued by both consumers and traders, although consumers seem less interested in it overall.

Traders are more likely than consumers to use European Consumer Centers and are more aware of their existence.

Interested parties in all categories indicate that they have a more limited interest in collective action as a mechanism for finding a mutually acceptable solution to their dispute.

Use of digital tools and artificial intelligence (AI) in ADR

Two-thirds of the ADR structures are convinced that the current dispute resolution processes in the Member States are digitized and easy to use, but the remaining stakeholder groups, in particular consumer representatives, disagree.

In the NAIS ADR Center, the entire process, from the submission of the complaint to the signing of the agreement, is digitized. Negotiations are carried out entirely online, in the form of a chat between the parties.

Across all categories, respondents agreed that using digital dispute resolution tools is not an option available to everyone, with consumer opinion particularly strong in this statement.

57 (50%) respondents across all categories are open to the use of AI in consumer disputes, but believe that the final decision should be made by a human. According to the survey results, traders are more confident than consumers about using AI in dispute resolution.

Role of public authorities and cross-border cooperation

According to the respondents, the two most important actions that public institutions should take are equally to raise the awareness of both consumers and traders about consumer rights and that they should find a way to stop traders from breaking the law ( both selected 48 times (41%)).

Opinions of consumers and traders differ widely as to whether the actions taken by public authorities in their country are effective enough to ensure that consumer protection legislation is well respected. The majority of marketers say that such actions are effective, but the majority of consumers disagree.

In all categories, respondents agree that their country's consumer protection authorities are weak when it comes to protecting consumers against illegal practices by traders established outside the EU.

The two main priorities of cross-border cooperation of consumer protection authorities should be to investigate dishonest traders involved in cross-border activities (69/59%) and to enforce them to comply with the law (66/56%).

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