I. Purpose, Scope and Definitions
This Recommendation sets out common principles for Member countries on mechanisms for consumers to resolve disputes and obtain redress for economic harm resulting from transactions with businesses involving goods or services, including transactions across borders. It is intended to apply solely to complaints initiated by or on behalf of consumers, and not to complaints initiated by businesses against consumers or another business.
The Recommendation is primarily aimed at third-party dispute resolution and redress mechanisms. It recognises that consumer disputes can often be resolved directly by the relevant business and that consumers and businesses should first attempt to resolve their disputes directly before seeking recourse through third-party mechanisms.
For the purposes of this Recommendation, the terms:
• “Dispute resolution” refers to the use of mechanisms designed to provide consumers who have suffered economic harm resulting from transactions involving goods or services, including transactions across borders, the opportunity to resolve their complaints against businesses and to obtain redress. This term is inclusive and encompasses informal and formal mechanisms, online and offline mechanisms, private and public sector mechanisms, and administrative and judicial mechanisms;
• “Redress” refers to compensation for economic harm, whether in the form of a monetary remedy (e.g. a voluntary payment, damages, restitution, or other monetary relief) or a conduct remedy with a restorative element (e.g. exchange of a good or service, specific performance or rescission of a contract);
• “Economic harm” refers to actual monetary loss sustained by a consumer as a result of a breach of legislation or common law principles aimed at protecting consumers;
• “Consumer protection enforcement authority” means any national public body, as determined by each Member country, that has as a principal mission implementing laws against fraudulent, misleading, or unfair commercial practices affecting consumers and has powers (a) to conduct investigations or (b) to pursue enforcement proceedings, or (c) to do both;
• “Disadvantaged or vulnerable consumers” refers to particular consumers or categories of consumers, who because of personal characteristics or circumstances (e.g. age, mental or physical capacity, education, income, language or remote location) may meet particular difficulties in accessing dispute resolution and redress.
II. Domestic Frameworks for Dispute Resolution and Redress
Member countries should review their existing dispute resolution and redress frameworks to ensure that they provide consumers with access to fair, easy to use, timely, and effective dispute resolution and redress without unnecessary cost or burden.
In so doing, Member countries should ensure that their domestic frameworks provide for a combination of different mechanisms for dispute resolution and redress in order to respond to the varying nature and characteristics of consumer complaints.
In addition, Member countries should pay special attention to the ability to obtain or facilitate monetary redress for consumers which is an important element of a comprehensive consumer protection enforcement framework.
In particular, Member countries should work towards providing consumers with dispute resolution and redress mechanisms from each of the categories set out in Sections A to C below, which are complementary and mutually reinforcing.
A. Dispute Resolution and Redress Mechanisms for Consumers Acting Individually
1. Consumers should have access to dispute resolution mechanisms to resolve their individual disputes with businesses, and where appropriate, obtain redress.
2. These mechanisms should not impose a cost on consumers that is disproportionate to the value of the claim at stake.
3. These mechanisms should be designed to be sufficiently accessible and easy to use to enable consumers to elect to conduct the procedure without need for legal representation or assistance as far as possible.
4. Consumers should be provided with clear, comprehensible, and accurate information on the procedure, including the process for initiating a complaint and selecting a dispute resolution mechanism, expected costs and duration of the procedure, possible outcomes, avenues for appeal, and whether the outcome is binding.
5. These mechanisms should be designed so that they can be used by consumers with only minimal additional information or help (e.g. through the use of standard forms to facilitate the submission of necessary documents).
6. The special needs of disadvantaged or vulnerable consumers should be considered so that they, or their representatives, can access these mechanisms.
7. Dispute resolution and redress mechanisms for consumers acting individually include, but are not limited to:
a) Alternative dispute resolution services, including online dispute resolution, by which consumers and businesses engage in an out-of-court process to reach an agreement. Such services may include procedures which lead to the settling of the dispute through the active intervention of a neutral third party, who proposes or imposes a solution or procedures which facilitate the resolution of a consumer dispute by bringing the parties together and assisting them in reaching a solution by common consent. They may also include agency based mechanisms, by which consumers submit their complaint against a business to a public agency for investigation and finding; and/or
b) Simplified court procedures for small claims, which offer consumers the opportunity to obtain a judicial determination of their dispute through less formal and expedited procedures than those used in traditional court proceedings. This may include simplified proceedings in separate courts or tribunals of limited jurisdiction or simplified proceedings in the regular courts of first instance.
B. Dispute Resolution and Redress Mechanisms for Consumers Acting Collectively
1. When a number of consumers allege that they have suffered economic harm as a result of the similar conduct of the same entity or related entities, and it is not practicable or efficient for them to act individually to resolve their disputes, those consumers should have access to mechanisms that provide for the collective resolution of those disputes.
2. Member countries should ensure that the collective resolution procedures are transparent, efficient, and fair to both consumers and businesses. Accordingly, Member countries should ensure that:
a) Such procedures provide meaningful relief for consumers, particularly when a proposed settlement involves non-monetary relief or when those who act on behalf of consumers seek to benefit disproportionately at the expense of harmed consumers;
b) Such procedures include measures to discourage abusive collective actions, particularly when consumers have not suffered economic harm; and
c) Such procedures are not used to protect domestic businesses from competition or applied unfairly against foreign businesses.
3. Where collective action is available on an “opt-in” basis, whereby consumers must take specific steps to join themselves to the collective action, Member countries should ensure that reasonable measures are taken to inform consumers of the initiation of such cases so that they can take steps to include themselves within the group and benefit from the resolution.
4. Where collective action is available on an “opt-out” basis, whereby consumers are joined to the collective action unless they take specific steps to exclude themselves, Member countries should ensure that reasonable measures are taken to inform consumers of the initiation of such cases so that they can take steps to exclude themselves if so desired. Consumers should not be forced to take part in, or be bound by the resolution of, a collective action proceeding of which they have not been adequately informed.
5. Dispute resolution and redress mechanisms for consumers acting collectively include, but are not limited to:
a) Actions initiated by an individual consumer in his or her own name and acting as a representative party for other consumers who have suffered economic harm as a result of the similar conduct of the same entity or related entities; and/or
b) Actions initiated by consumer organisations acting as representative parties for consumers who have suffered economic harm as a result of the similar conduct of the same entity or related entities; and/or
c) Actions initiated by consumer protection enforcement authorities acting as representative parties for consumers who have suffered economic harm as a result of the similar conduct of the same entity or related entities, as more fully described in Section II. C below.
C. Mechanisms for Consumer Protection Enforcement Authorities to Obtain or Facilitate Redress on Behalf of Consumers
1. Member countries should work towards ensuring that consumer protection enforcement authorities have the ability to take action and obtain or facilitate redress for consumers, including monetary redress. Where appropriate, in seeking such remedies, consumer protection enforcement authorities may be assisted by other enforcement entities, such as private consumer organisations.
2. Mechanisms for consumer protection enforcement authorities to obtain or facilitate redress on behalf of consumers include, but are not limited to:
a) The ability to seek a court order for redress in civil proceedings; and/or
b) The ability to seek a court order for redress in criminal proceedings; and/or
c) The ability to act as a representative party in lawsuits seeking redress.
III. Cross-border Consumer Disputes
In implementing the mechanisms contained in Section II, Member countries should take into account the need to improve awareness of and access to dispute resolution and redress mechanisms and to enhance the effectiveness of consumer remedies in cross-border disputes.
In particular, Member countries should work towards:
1. Providing clear information to consumers and relevant consumer organisations on judicial and extra-judicial dispute resolution and redress mechanisms available within their countries;
2. Participating, where possible, in international and regional consumer complaint, advice and referral networks;
3. Expanding the awareness of justice system participants, including the judiciary, law enforcement officials, and other government officials, as to the needs of foreign consumers who have been harmed by domestic wrongdoers;
4. Encouraging the greater use of technology, where practicable, to facilitate the dissemination of information, and the filing and management of consumer disputes, in particular cross-border disputes;
5. Taking steps to minimise, when necessary and appropriate, legal barriers to applicants from other countries having recourse to domestic consumer dispute resolution and redress mechanisms;
6. Developing multi-lateral and bi-lateral arrangements to improve international judicial co-operation in the recovery of foreign assets and the enforcement of judgments in appropriate cross-border cases.
IV. Private Sector Co-operation
1. Member countries should encourage businesses and industry groups to provide consumers with voluntary mechanisms to informally, and at the earliest possible stages, resolve their disputes and obtain redress as appropriate.
2. Such mechanisms may include, but are not limited to:
a) Effective processes for internal complaints handling, which provide consumers with the opportunity to resolve their complaints directly with the business concerned in a fair, effective, and timely manner without imposing a fee or charge for accessing or using these processes;
b) Private third party alternative dispute resolution services, by which businesses establish, finance, or run out-of-court consensual processes or adjudicative processes to resolve disputes between that business and consumers. This may include private ombudsman schemes, by which businesses appoint and finance a neutral body to investigate, determine or make recommendations on any disputes that may arise between that business and consumers;
c) Protection for payment cardholders in disputes with merchants, by which payment card issuers provide consumers with remedies for disputes arising out of transactions for goods or services. Such protection may include, for example, limitations on liability to pay for non-delivered or non-conforming goods or services;
d) Customer satisfaction codes that set levels of service and describe performance and redress responses when service levels are not met.
3. Member countries should encourage businesses to adhere to domestic and international standards developed through open and transparent multi-stakeholder processes pertaining to internal complaints handling, private third party alternative dispute resolution services, protection for payment cardholders in disputes with merchants, and customer satisfaction codes.
V. Mechanisms for Collecting Consumer Complaints and Analysing Marketplace Trends
1. Member countries should work towards ensuring that they have systems in place to collect consumer complaints and, where necessary, analyse marketplace trends.
2. Member countries should consider opportunities for the collection and exchange of information from foreign consumers in developing their systems, and should consider the feasibility of using existing databases for such collection and exchange. Member countries should give due consideration to the relevant protection of any information that could be so exchanged.
VI. Education and Awareness
1. Member countries should co-operate with businesses, industry groups, and consumer groups in furthering consumer and business understanding of how to avoid disputes, of dispute resolution and redress mechanisms available to consumers, and of where consumers can file complaints.
2. In designing education and awareness initiatives, special consideration should be given to the needs of disadvantaged or vulnerable consumers.