'Consumer Redress in the United States' by Amy Schmitz in
The Transformation of Consumer Dispute Resolution in the European Union: A Renewed Approach to Consumer Protection (Oxford University Press, 2016, forthcoming)
provides
a snapshot of consumer redress processes in the United States, and suggests policy reforms building on advances in the European Union. The US traditionally has been distinct in its allowance for class relief and other judicial action as the primary means for consumers to pursue remedies in B2C transactions. However, these traditional American remedies processes have diminished due to the strict enforcement of pre-dispute arbitration clauses and other restrictions on class actions in the US. Furthermore, US small claims court and credit card chargeback procedures are limited and outdated, while emerging online complaint and dispute resolution processes remain largely unregulated. This leaves many consumers without meaningful access to remedies when they experience purchase problems. Accordingly, the chapter will suggest ideas for regulatory reforms building on the EU model for ODR aimed to expand consumers’ access to remedies with respect to their small dollar claims.
Schmitz notes
Borders are losing meaning in business-to-consumer (“B2C”) transactions as consumers increasingly satisfy their purchasing needs through Internet contracting (“ecommerce”). This is because ecommerce brings together buyers and sellers from all over the world and eliminates the need for face-to-face (“F2F”) negotiations. However, borders matter when disputes develop due to jurisdictional difference in laws and procedures for obtaining remedies. It is therefore critical to consider legal redress mechanisms on a global scale. Businesses and policymakers must address differences in consumer redress systems, and collaborate to create mechanisms that operate efficiently and fairly for consumers regardless of residence. ...
F2F processes in general have not provided consumers with adequate redress on claims against businesses regarding common purchases. It is rarely worth the cost and stress of pursuing these processes when the expected recovery is low. Additionally, businesses in the U.S. may use arbitration clauses to hinder consumers from shedding public light on purchase problems or obtaining remedies on their claims. At the same time, although small claims court, credit card chargeback, complaint portals, and limited ODR systems for B2C claims exist in the U.S., U.S. lawmakers have not advanced development of robust ODR systems aimed to deliver due process for consumer purchase disputes.
In contrast, the E.U. leads the U.S. in developing ODR programs. This Chapter suggests that the U.S. should follow the E.U. in promoting ODR processes designed to revive corporate responsibility and consumer trust in their purchases. These processes must be transparent, user-friendly, and economical in light of the complexity and possible payouts on the claims at issue.138 They also should be secure and subject to government oversight to ensure fairness. Such processes would benefit consumers and companies, and advance cross-border B2C trade as the U.S. brings its dispute resolution policies in line with peers overseas.
