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Helping consumers settle disputes without going to court
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The European Commission has today launched a  public consultation on alternative dispute resolution (ADR) schemes for consumers.  The purpose is to increase consumer confidence in shopping in the single market by ensuring easier, faster and cheaper non-judicial settlements of disputes between consumers and traders across the EU.

ADR refers to schemes available to help consumers resolve disputes with traders when they have a problem with goods or services. The advantage of ADR for both consumers and professionals is that it is cheaper, quicker and offers more flexibility than going to court.  Also known as "out-of-court mechanisms", the schemes have developed differently across Europe and because of this, the status of the decisions differ greatly between member states.

John Dalli, the EU Health and Consumer Commissioner said: "All EU consumers should have at their disposal a simple, quick and inexpensive way to resolve their disputes with traders. The purpose of the consultation launched today is to lead to an initiative which will ensure that consumers feel more confident in the single market, feel safer shopping cross-border and that the burden on national courts is reduced".

There are currently at least 705 ADR schemes in the EU, but consumers cannot always get the help they need. Forty- three operate in the UK alone and some are mainly sector-specific – for example,  the Financial Ombudsman which handled more than 160,000 cases in 2009. However, gaps have been identified, particularly in the transport sector.

It is estimated that losses incurred by EU consumers who had problems make up about 0.3 per cent of Europe's GDP.

The results of the consultation which runs until 15 March 2011 will be used to shape the Commission's legislative proposal scheduled for November 2011.

    Background

    The defining characteristic of ADR is that it is non-judicial. It involves a neutral third party, such as an arbitrator or mediator, who can propose a solution or bring the parties together to help find a solution. ADR does not cover customer complaint handling systems by business, amicable settlements directly between a consumer and a trader, or mediation processes within the judicial system. It primarily concerns individual cases, but can also handle together several individual cases when they are similar. ADR bodies have been more widely set up to solve disputes in the telecommunications, travel/tourism and financial services sectors. The need for ADR schemes is becoming pressing in the online environment given the increase in online shopping (from 22 per cent in 2004 to 37 per cent).  Nevertheless, cross-border online transactions remain low (8 per cent). One reason is that consumers  lack confidence when shopping abroad. Indeed, 71 per cent of consumers consider the resolution of problems more difficult when shopping abroad.

    The Commission has already been active in promoting ADR. Two Recommendations on consumer ADR exist which establish a number of minimum guarantees, such as independence, that ADR schemes should respect. Several Directives either encourage or oblige Member States to set up ADR schemes in specific sectors (e.g. energy and telecommunications). The recent Directive on Mediation (to be implemented by May 2011) encourages judges to invite parties to settle their case via mediation.

    Three main problems remain:
    The absence of ADR schemes in some market sectors or regions of the EU
    Limited awareness and lack of transparency: 40 per cent of retailers  do not know about ADR schemes, and there is little access to information for retailers and consumers. In 2009, only 3 per cent of EU consumers took their case to an ADR body, and only 9 per cent of European retailers actually used an ADR scheme.
    Traders' reluctance to engage: 64 per cent of ADR schemes are voluntary and only 6 per cent of European traders are members of any scheme. Traders do not always comply with decisions reached since these are non-binding.

    Further action at EU level is therefore needed in order to set up an EU-wide system as foreseen in the Commission work programme 2011 


    For more information, please contact the London press office on 020 7973 1971.
    Please note: all amounts expressed in sterling are for information purposes only.

     

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    Last update: 18/01/2011  |Top