[Federal Register Volume 65, Number 32 (Wednesday, February 16, 2000)]
[Notices]
[Pages 7831-7833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-3742]



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DEPARTMENT OF COMMERCE

International Trade Administration

FEDERAL TRADE COMMISSION


Public Workshop: Alternative Dispute Resolution for Consumer 
Transactions in the Borderless Online Marketplace

AGENCY: International Trade Administration, Department of Commerce; 
Federal Trade Commission.

ACTION: Initial Notice Requesting Public Comment and Announcing Public 
Workshop

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SUMMARY: The United States Department of Commerce (the ``Department'') 
and the Federal Trade Commission (the ``FTC''), will hold a public 
workshop to examine developments, gain further understanding, and 
identify potential issues associated with the use of alternative 
dispute resolution for online consumer transactions. This Notice is 
also seeking public comments to inform the discussion that will take 
place at the workshop.

DATES: Written comments and requests to participate as a panelist in 
the workshop must be submitted on or before March 21, 2000. The 
workshop will be held in spring 2000. The exact date and location of 
the workshop will be announced at a later date.

ADDRESSES: Mail written comments to Secretary, Federal Trade 
Commission, Room H-159, 600 Pennsylvania Avenue, NW, Washington, D.C. 
20580.

SUBMISSION OF DOCUMENTS: Comments should be captioned ``Alternative 
Dispute Resolution for Consumer Transactions in the Borderless Online 
Marketplace.'' To enable prompt review and public access, paper 
submissions should include a version on diskette in ASCII, WordPerfect 
(please specify version), or Microsoft Word (please specify version) 
format. Diskettes should be labeled with the name of the party and the 
name and version of the word processing program used to create the 
document. As an alternative to paper submissions, email comments to: 
[email protected]. Messages to that address will receive a reply in 
acknowledgment. Comments submitted in electronic form should be in 
ASCII, WordPerfect (please specify version), or Microsoft Word (please 
specify version) format.
    Written comments will be available for public inspection in 
accordance with the Freedom of Information Act, 5 U.S.C. 552 and 
Commission regulations, 16 CFR Part 4.9, on normal business days 
between the hours of 8:30 a.m. and 5:00 p.m. at 1401 Constitution 
Avenue, N.W., Washington, D.C. 20230 and at 600 Pennsylvania Avenue, 
N.W., Washington, D.C. 20580. The Department and the FTC will make this 
notice, and, to the extent possible, all papers or comments received in 
response to this notice available to the public through the Internet at 
www.ita.doc.gov and www.ftc.gov. Paper submissions should include three 
paper copies and a version on diskette in a format specified above.

FOR FURTHER INFORMATION CONTACT: Kate Rodriguez, International Trade 
Administration, phone (202) 482-2145; email: 
[email protected] or Maneesha Mithal, Federal Trade 
Commission, phone: (202) 326-2771; email: [email protected].

SUPPLEMENTARY INFORMATION: In November 1998, the President directed the 
Secretary of Commerce, in consultation with the Federal Trade 
Commission and other relevant Federal agencies, to foster consumer 
confidence in e-commerce by working to ensure effective consumer 
protection online. Included in this directive was the mandate to 
facilitate partnerships between industry and consumer advocates to 
develop redress mechanisms for online consumers. Since the President's 
Directive was released, broad interest in the development of one 
redress mechanism, alternative dispute resolution (ADR), has been 
expressed in the Organization for Economic Cooperation and Development 
(OECD) and the June 1999 FTC Workshop on consumer protection in the 
global electronic marketplace. Numerous private sector groups have also 
expressed interest in alternative dispute resolution, including the 
Global Business Dialogue on Electronic Commerce, Internet Law and 
Policy Forum, Trans-Atlantic Business Dialogue and Trans-Atlantic 
Consumer Dialogue.
    To begin an open discussion of how alternative dispute resolution 
programs may contribute to fostering consumer confidence without 
unnecessarily burdening business, the Department of Commerce and the 
Federal Trade Commission will hold a public workshop to examine the use 
of alternative dispute resolution as one means of providing 
transparent, effective, quick, and inexpensive redress for consumers 
engaging in online transactions. The workshop aims to explore the use 
and development of alternative dispute resolution programs in a variety 
of contexts; to identify obstacles to and potential issues arising from 
more widespread use of alternative dispute resolution for online 
consumer transactions; and to examine incentives for creating such 
programs. The agencies seek a balanced discussion about the potential 
of alternative dispute resolution to facilitate the growth of 
electronic commerce by providing consumers and business with greater 
confidence and predictability for resolving disputes arising in the 
online environment. The agencies also wish to explore existing and 
emerging models for fair and effective alternative dispute resolution 
for online consumer transactions.

Background

    The electronic marketplace offers consumers unprecedented choice 
and 24-hour accessibility and convenience, and it offers businesses 
low-cost access to an enormous customer base. It also poses new 
challenges, however. Consumers must be confident that the goods and 
services offered online are fairly represented and the merchants with 
whom they are dealing, who may be located in another part of the world, 
deliver on their commitments. Consumer confidence also requires that 
consumers have access to fair and effective redress for problems 
arising in the online marketplace. In many instances, consumers face 
unique difficulties in resolving problems arising out of online 
transactions, such as language and cultural differences, and the 
inconvenience and expense that may result from the fact that the 
consumer and seller may be in entirely different locales, possibly 
thousands of miles apart. Where resort to litigation becomes necessary, 
consumers may also encounter difficulties in establishing jurisdiction, 
determining the applicable law, and enforcing judgments.
    At the same time, it is important to encourage the growth of this 
new marketplace and to avoid unduly burdening businesses, particularly 
small- and medium-sized enterprises, who will face similar difficulties 
in resolving problems arising out of online transactions. In addition, 
businesses face burdens in determining where they could be subject to 
jurisdiction and which laws might apply to them. Complying with the 
laws of numerous jurisdictions and being vulnerable to lawsuits in 
multiple courts could significantly increase the cost of doing business 
online.
    One way to address business and consumer concerns regarding dispute 
resolution for online transactions is to work toward the development of 
effective alternative methods of dispute resolution. Broad interest in 
the development of alternative dispute resolution mechanisms in this 
arena has

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already also been expressed in other important international fora:

OECD Guidelines on Consumer Protection in the Context of Electronic 
Commerce

    During 1998 and 1999, the Consumer Policy Committee of the OECD 
drafted Guidelines on Consumer Protection in the Context of Electronic 
Commerce, which were approved by the OECD Council on December 9, 1999 
(see text of the Guidelines at http://www.oecd.org/dsti/sti/it/consumer/prod/guidelines.htm). The Guidelines address the prevention of 
fraud, deception and unfairness in electronic commerce; provide 
guidance to industry on fair business practices; and emphasize the need 
for global cooperation among governments, consumers and businesses. In 
addition, the Guidelines seek to address how effective redress could be 
provided to consumers.
    The Guidelines section on Dispute Resolution and Redress provides 
that ``[c]onsumers should be provided meaningful access to fair and 
timely alternative dispute resolution and redress without undue cost or 
burden.'' To accomplish this goal, the Guidelines call on business and 
consumer representatives to establish mechanisms to address consumer 
complaints and assist consumers in resolving disputes. In addition, 
they encourage businesses, consumer representatives and governments to 
``work together to continue to provide consumers with the option of 
alternative dispute resolution mechanisms that provide effective 
resolution of the dispute in a fair and timely manner and without undue 
cost of burden to the consumer.''

June 1999 FTC Workshop

    Last June, the FTC convened a public workshop on consumer 
protection in the global electronic marketplace, which aimed to 
facilitate an ongoing dialogue on how governments, industry and 
consumers could work together to encourage the development of a global 
marketplace that offered safety, transparency and legal certainty for 
consumers. One of the issues addressed at the workshop was how to 
provide consumers with meaningful access to redress in the event of a 
dispute arising from an electronic transaction. A consensus emerged at 
the workshop that out-of-court avenues for consumer redress should be 
explored. Participants at the workshop agreed that one of the most 
effective ways to ensure meaningful access to redress for consumers is 
through innovative forms of alternative dispute resolution, such as 
online dispute resolution. Through alternative dispute resolution, 
consumers could obtain quick, inexpensive, and effective redress 
without having to resort to courts, while at the same time, ensuring 
that businesses' exposure to lawsuits in multiple jurisdictions would 
be reduced.

Private International Fora

    Numerous private organizations, including both business and 
consumer organizations, have advocated the development of alternative 
dispute resolution mechanisms to provide easy and inexpensive remedies 
to e-consumers. For example, the Transatlantic Business Dialogue and 
the Transatlantic Consumer Dialogue have both recommended that US and 
EU governments encourage the development of alternative dispute 
resolution mechanisms. Consensus emerged at the July meeting of the 
Internet Law and Policy Forum, a group of worldwide companies engaging 
in e-commerce, that alternative dispute resolution mechanisms for 
online consumers should be explored. In addition, at its meeting in 
September, the Global Business Dialogue on Electronic Commerce 
encouraged businesses to take the lead in providing alternative, easy 
and inexpensive systems to deliver remedies to e-consumers, and 
governments to promote alternative dispute resolution mechanisms for 
online consumer transactions by legally authorizing such mechanisms and 
developing legal frameworks to recognize and enforce such mechanisms. 
At that meeting, Secretary of Commerce Daley emphasized the need to 
develop effective alternative dispute resolution mechanisms.
    The Department and the FTC recognize that the use of alternative 
dispute resolution mechanisms has been widespread for some time in a 
variety of contexts. It has also been the subject of international 
arrangements developed by international organizations such as the World 
Intellectual Property Organization (WIPO). The Department and the FTC 
recognize that these arrangements may offer lessons learned for 
examining ADR in the context of online consumer transactions.
    To inform the Department and the FTC prior to the workshop, these 
agencies seek the views and additional information on this subject from 
industry, consumer representatives, the academic community and the 
larger public from the United States and other countries, including 
views on the elements of fair and effective alternative dispute 
resolution for online consumer transactions. Views are welcome on any 
aspect of this subject, though the following questions are offered to 
help organize the comments:

Existing Alternative Dispute Resolution Programs

    (1) What types of ADR are there? Are certain types better suited 
for online transactions?
    (2) Under what circumstances is ADR used to resolve disputes about 
consumer transactions today? How does ADR work in such cases? How are 
decisionmakers or mediators selected under an ADR program? What lessons 
can be taken from such a mechanism?
    (3) What ADR programs currently exist for online consumer 
transactions? Do these programs address cross-border transactions? 
Please describe these programs and how they work. In describing the 
programs, please address issues such as fairness, effectiveness, 
affordability, accessibility, and due process concerns.
    (4) Does this ADR program provide information to a consumer before 
he or she is asked to agree to submit disputes to the program? At what 
point and how is this information provided?
    (5) What are the procedural effects of this program, for example, 
to what extent are decisions binding? To what extent are they 
appealable for a decision? Is participation in the program a 
prerequisite to filing a law suit?
    (6) How are decisions enforced under this ADR program?
    (7) What are the costs to the parties engaging in ADR? Who funds 
these costs? Is this program cost-effective? Is it suitable for small-
dollar transactions? Does this program handle a large volume of 
disputes? Is it capable of doing so?
    (8) Is ADR for online consumer transactions better suited to 
certain situations than others, for example, cross-border disputes or 
cases limited to a certain monetary amount? Are there any other factors 
relevant to determining whether ADR is suited to particular online 
consumer transactions?

Development of Alternative Dispute Resolution Programs for Online 
Consumer Transactions

    (9) Describe alternative dispute resolution programs for online 
consumer transactions that are being developed by businesses, consumer 
representatives or other groups.
    (10) What are the obstacles, if any, to the implementation of 
alternative dispute resolution programs for online consumer 
transactions? What are the

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incentives and disincentives for businesses and consumers to use such 
programs?
    (11) A variety of arrangements have been developed through 
international organizations and private sector bodies to facilitate 
ADR, particularly in a commercial global context. What lessons have 
been learned from these experiences that might contribute to better 
understanding of this area in the context of consumer online 
transactions?
    (12) To what extent are mechanisms that have been designed to 
prevent disputes from arising in online consumer transactions, such as 
escrow accounts, being used in the online world? Are there legal or 
other obstacles to the development of these types of mechanisms?

Elements of Fair and Effective Dispute Resolution Programs for Online 
Consumer Transactions

    (13) The OECD ``Guidelines on Consumer Protection in the Context of 
Electronic Commerce'' encourage businesses, consumer representatives 
and governments to ``work together to continue to provide consumers 
with the option of alternative dispute resolution mechanisms that 
provide effective resolution of the dispute in a fair and timely manner 
and without undue cost of burden to the consumer.'' What are some steps 
that could be taken to implement this principle? How can issues such as 
those raised in questions 4 through 7 (above) be considered in this 
context?
    (14) What issues are raised or created for ADR, if any, by online 
consumer transactions that do not exist in the traditional, offline 
environment?

Role of Governments

    (15) What should be the role of governments, if any, in connection 
with the use and/or development of alternative dispute resolution 
programs for online consumer transactions?
    (16) What, if any, U.S. laws or international treaties to which the 
United States is a member, would have to be examined as potential 
barriers to implement effective alternative dispute resolution programs 
for online consumer transactions?

Workshop

    (17) What should be the primary focus and scope of the public 
workshop on alternative dispute resolution for online consumer 
transactions?
    (18) Are there any other interests not previously described in this 
notice that should be represented at the workshop?

    By direction of the Commission.

    Dated: February 11, 2000.
Donald S. Clark,
Secretary.
Barbara S. Wellbery
Counsellor to the Under Secretary for Electronic Commerce, 
International Trade Administration, Department of Commerce.
[FR Doc. 00-3742 Filed 2-15-00; 8:45 am]
BILLING CODE 3510-25-U; 6750-01-U