Consumer ODR – Redefining pathways to dispute settlement in a post-consumer society
On 1 December 2023, Anna van Duin and Paddy Leerssen organized an expert workshop at the University of Amsterdam’s Institute for Information Law (IViR) to discuss consumer dispute resolution in light of the new rules for online dispute resolution (ODR) laid down in Art. 20 and 21 of the Digital Services Act (DSA). The workshop brought together experts from academia and industry, leading to engaging discussions of the state of play in the field; click here for an overview of the central theme and programme. This contribution is written by Prof. Vanessa Mak, one of the keynote speakers.
In this post, Prof Mak argues that the DSA provisions on dispute resolution are a valuable addition to the existing pathways to justice that exist for online consumers. Nevertheless, the DSA’s combination of economic rights, content moderation and fundamental rights in one legal instrument continues to raise issues of demarcation. For consumers, the risk is that finding the right pathway towards the enforcement of rights, which is already a challenge, will become even more complicated.
When we talk about consumer law, we often talk about consumer rights. Are consumers entitled to expect a certain quality of products and services? What information do they need to make purchasing decisions? And what remedies do they have if products are of unsatisfactory quality or unsafe? However, none of these substantive rights matter very much if something else is not also guaranteed: effective enforcement.
The European Union has taken important steps in the past to ensure that consumers have effective access to justice and effective means of enforcement of rights. Still, the framework can be improved.
The expert workshop focused on online dispute resolution in light of the new rules laid down in Art. 20 and 21 of the DSA. Seeing that these provisions relate to disputes concerning content moderation decisions made by online platforms, they add something to the existing rules that mainly protect consumers’ economic rights. That is not only good news, it also raises new problems. For consumer law one of the main takeaways from the discussion during the workshop is that recent regulation and legislative proposals seem to be harbingers of a shift towards a new approach to the protection of consumer interests. Going beyond the protection of economic rights, the protection of consumers in the EU digital market increasingly involves the protection of other, non-monetary interests such as data protection and privacy, free speech, and to some extent the value derived from content creation on social media platforms (on the latter, see Catalina Goanta’s ERC project Human Ads). The blurring of lines gives rise to questions of demarcation and potentially diminishes the effective enforcement of consumer rights. So where are these developments taking us?
Towards a post-consumer society
My keynote focused on the ways in which the DSA framework adds new layers of protection for EU consumers in addition to other instruments specifically dedicated to consumer dispute resolution (complementing Pietro Ortolani’s presentation on the “procedural turn” in platform regulation, on which see Ortolani 2023). Grochowski has posited that European consumer law is paying heed to the development of a post-consumer society in which traditional consumption – namely, the acquisition of things – loses its importance due to a growing interest of consumers in experiences, emotions and services (Grochowski 2023). That observation fits well with the newly introduced rules for ODR under the DSA, which also concern consumers in their capacity of users of online platforms.
The move towards a post-consumer society in regulation is not without challenges. Interestingly, but still not sufficiently debated, the DSA framework groups together all types of issues related to platform governance, ranging from the protection of free speech to the regulation of online marketplaces (Busch & Mak 2021). Although that is understandable in light of the aim of the European Commission for creating a comprehensive Act that could curb the power of Big Tech, the result is that the European consumer acquis built upon rights and remedies in private law now has to accommodate cross-cutting rules of a different nature. That is visible also in recent debates on EU legislative proposals and reforms. Fundamental rights and open norms such as “due diligence” (from the proposed CSDDD) and “professional diligence” (from the Unfair Commercial Practices Directive (UCPD), now discussed in light of the European Commission’s Digital Fairness Fitness Check) are creeping into the fabric of European consumer protection rules for digital marketplaces.
The entanglement of market regulation with other interests that are increasingly important to consumers is not in itself a bad development. With regard to enforcement, it means that the range of “pathways to justice” for consumer dispute resolution is expanded beyond the existing routes of litigation, alternative dispute resolution (ADR) by dedicated national bodies such as the Dutch ADR body for consumer dispute resolution ‘De Geschillencommissie’ (degeschillencommissie.nl), ODR, and collective redress (e.g. by supervisory authorities like the Dutch Authority for Consumers and Markets (ACM), or through collective redress procedures). However, it raises questions of demarcation.
Demarcating disputes under the DSA and the ADR Directive
The additional pathway provided by the DSA needs to be considered in relation to other instruments regulating consumer dispute resolution in Europe. Some untangling of the various protected interests is due in that respect.
Art. 20 and 21 of the DSA relate to decisions on content moderation made by online platform providers. The provisions require the platform to maintain an internal complaint-handling system (Art. 20) and the Digital Services Coordinators of EU member states to appoint certified out-of-court dispute settlement bodies (Art. 21). The provisions therefore create a new pathway to justice for users of online platforms who are unhappy with content moderation decisions (e.g. removing content) taken by the platform. They do not cover traditional consumer disputes between consumers and traders (compare Van Gelder 2022). How does the DSA regime then relate to other rules on consumer ODR?
Existing regulation is tailored to traditional consumer disputes, which concern consumer complaints towards the seller or trader. The majority of such claims are typical for markets in which physical goods are purchased, concerning e.g. the quality of the product, non-delivery or late delivery, additional charges, or the safety of products (Consumer Conditions Scoreboard 2019). The EU has for these types of disputes harmonized the conditions for access to justice through ADR (Directive 2013/11/EU) and ODR (Regulation (EU) No 524/2013). The ADR Directive contains rules on access, independence and impartiality, transparency, effectiveness, and fairness in ADR procedures (see on the requirements for fair procedure also Barata 2023). In terms of substantive justice, it contains a legality requirement in Art. 11, prescribing that the consumer shall not be deprived of protection afforded to him by mandatory rules of the applicable law. The ODR Regulation has added to this regime an ODR platform enabling consumer to directly contact the trader to resolve a dispute. The platform also contains a tool through which consumers in EU member states can search for ADR bodies in their country.
On 17 October 2023 the European Commission presented a set of proposals aimed at amending the regulation of consumer dispute resolution in the European Union. The proposals are threefold: amendment of the ADR Directive, repealing the ODR Regulation, and introducing quality requirements for dispute resolution procedures offered by online marketplaces and Union trade associations. Each of these proposals is inspired by the aim of improving the consumer dispute resolution framework for digital markets. To that end, the proposed ADR Directive aims to extend its scope to all types of EU consumer rights infringements – not only contractual issues, but also misleading price indication, discriminatory practices, omission of pre-contractual information etc. – regardless of whether the trader resides in the EU. It also aims to simplify ADR procedures for all actors. That includes reducing reporting duties for ADR bodies and information duties of traders, whilst encouraging traders to increase their engagement in ADR claims through the duty to reply. The ODR platform, which upon evaluation turned out to be hardly used and rarely successful in resolving consumer disputes, will be discontinued and replaced by “user-friendly digital tools” to assist consumers in resolving their disputes with traders. The Commissions’ recommendation, finally, aims to incentivize online marketplaces and EU trade associations to get aligned with the quality criteria laid down in the ADR Directive.
The proposed ADR Directive aims to complement the DSA provisions on ODR. That means that, whereas the DSA regulates ODR and out-of-court dispute settlement in relation to content moderation decisions of the platform, the ADR Directive governs disputes between consumers and traders relating to other issues, such as unsatisfactory quality or late delivery.
Navigating pathways to consumer ODR: will the DSA bring improvements?
The road ahead seems bright. Consumers not only get to benefit from new and improved rules on dispute settlement with the trader, but also from the additional protection provided by the DSA with regard to content moderation decisions. The post-consumer society therefore is taking shape in regulation.
Nevertheless, some warnings are in order. First, the demarcation between the ADR Directive and the DSA is likely not as clear-cut as it seems. The lines between the protection of consumers’ economic interests and fundamental rights protection are blurring, as evidenced by judgments of the German Bundesgerichtshof (BGH) (on which see Lutzi 2021) and the Italian Administrative Court of Appeal, confirming a decision of the Italian Authority for Consumers and Markets (AGCM) (see Zard & Sears 2023). These national courts and authorities applied the Unfair Contract Terms Directive (UCTD), respectively the UCPD, to Facebook’s terms and conditions concerning freedom of expression (Grochowski 2023; Zard & Sears 2023). These judgments are part of a recent trend in which the European consumer acquis in individual cases extends to other interests, such as data protection and freedom of speech, as long as the claim is related to an infringement of economic interests (see also CJEU C-252/21 Meta Platforms; Graef 2023). Whereas the extension of the scope of the consumer acquis can lead to greater protection of consumers in digital markets, it should be borne in mind that the protection of fundamental rights is in essence a different issue than the weighing of contractual interests. On what basis then will a civil court determine a term ‘unfair’?
In addition, issues of demarcation also arise under Art. 21 DSA, which tasks the Digital Services Coordinator with certifying out-of-court dispute settlement bodies that have ‘the necessary expertise in relation to the issues arising in one or more particular areas of illegal content, or in relation to the application and enforcement of terms and conditions of one or more types of online platform (emphasis added VM)’. One wonders how this provision will be applied in individual cases. For example, if a dispute settlement body has expertise in relation to the application and enforcement of the terms and conditions of one type of online platform, does that mean that it can only take on cases relating to that one platform? And can it only consider infringements of the terms and conditions or may it also rule on illegal content issues?
Second, the DSA contains a provision in Art. 14(4) that explicitly tasks online platform providers with the duty to monitor the application and enforcement of their own terms and conditions with regard to restrictions that they impose on information provided (e.g. posted on a platform) by users. They should do so ‘with due regard to the rights and legitimate interests of all parties involved, including the fundamental rights of the recipient of the service, such as the freedom of expression, freedom and pluralism of the media, and other fundamental rights and freedoms as enshrined in the Charter.’ Is that condition as sufficient safeguard for ensuring that online platforms pay respect to users’ rights of free speech (Quintais et al. 2022) or more generally their right to share information? The risks associated with private regulation are manifold. Online platforms are powerful actors, both in economic terms and due to the influence that they have on the conditions under which users conclude contracts through the platform. Leaving them this free to monitor information posted by users, with the platform’s terms and conditions as the main legal framework, carries the risk of unjustified limitations to users’ rights to post information. In consumer markets restrictions on information, e.g. not allowing a user to post a picture, can have a huge impact upon a trader’s visibility on a platform. Notably, that such risks exist does not diminish the general observation that private regulation can also provide a fruitful space for experimental regulation (Mak 2020).
Whether one sees risks or opportunities may depend on one’s general outlook on life. For optimists, and I count myself as one, the DSA provides new chances for law making through private regulation that can strengthen the effective enforcement of consumer rights. Of course, safeguards will have to be in place, ensuring that fundamental rights and legitimate interests are respected. Here lies a task for supervisory authorities, courts and ultimately the legislature.