EU online dispute resolution: A cause for confusion?

A newly introduced requirement for British-licensed operators to include links to the EU online dispute resolution platform on their websites and in emails to consumers is more likely to cause customer confusion than facilitate the resolution of disputes, argues Christopher Elliott from Wiggin LLP.

In July 2013, the EU issued its ambitious ADR Directive, designed to facilitate and promote the use of alternative dispute resolution (“ADR”) across the EU, by requiring EU businesses to ensure that ADR is available as a means of redress for EU consumers in relation to unsatisfactory goods or services, particularly for online sales.

The ADR Directive was implemented in the UK by the ADR Regulations, which came into force on 1 October 2015.

Somewhat surprisingly, ADR is not actually defined in the ADR Regulations, but is generally understood to be those processes which enable a consumer and business to settle a dispute via an independent and impartial mechanism without resorting to the court system (include mediation, conciliation, adjudication and arbitration).

Impact on gambling operators

The Gambling Commission has for some time now required British-licensed gambling operators to offer dispute resolution via an independent and approved ADR provider, as a mandatory condition of holding a British licence. This means that all British punters can, if they so wish, refer a dispute about the outcome of a gambling transaction to an ADR provider, free of charge, if they are not satisfied with the outcome of the operator’s own internal complaints handling procedure.

Operators are obliged to make these procedures “clear, comprehensible and easily accessible” both in their customer terms and conditions, and on their website. This requirement is clear and well understood by the industry. However, the introduction of the European online dispute resolution platform (“ODR Platform”) on 15 February 2016 may serve to muddy this clarity, at least for British-licensed operators and their customers.

The ODR Platform

The ODR Platform is a centralised platform operated by the European Commission which is designed to assist EU consumers in resolving disputes with retailers in relation to contracts for the sale of goods and services within the EU. It allows consumers who have a complaint about an online service to submit the complaint via an online complaint form on a user-friendly and multilingual platform.

On its face, the principle of the ODR Platform is sound, but digging a bit deeper into its application to the British remote gambling industry reveals certain limitations of how it will work in practice.

The ODR Platform is not yet available in all Member States, despite this being the reason the ODR Platform’s introduction was delayed. The first page of the ODR Platform website is covered in a disclaimer which explains that the ODR Platform is not available to customers in Croatia, Germany, Lithuania, Luxembourg, Malta, Poland, Romania, Slovenia and Spain (at the time of writing) – some fairly significant (and regulated) online gambling markets.

The ADR Regulations do not create any new obligation on a business to resolve a dispute via ADR at all. Online businesses are not actually obliged to use ADR unless they are already obliged to use an ADR scheme by legislation, trade association or, in the case of British-licensed gambling operators, as a condition of their licence.

In respect of British gambling operators’ non-British business (or more particularly, business which is not conducted in reliance on their British licence), an assessment will need to be made as to whether an obligation exists to offer settlement of customer disputes via an ADR scheme (e.g. as a condition of a Gibraltar or Malta licence, or as prescribed in the terms and conditions). Where no such obligation exists, whilst information will need to be made available to consumers about the availability of ADR, operators will have the ability to refuse to the use of an ADR procedure for those customers.

ODR Platform: What are gambling operators required to do?

As explained in the Government’s guidance, from 15 February 2016, British gambling operators will have to provide the following information available to consumers, over and above what they are already mandatorily required to do as a condition of their licence:

• A link to the ODR Platform on the website and in the customer terms and conditions; and
• A link to the ODR platform in any emails sent to consumers offering their services, as well as making the consumer aware of the possibility of using the ODR platform for resolving a dispute.

The government’s guidance explains that the requirement to offer a link to the ODR Platform is in addition to any existing mandatory obligation to offer an approved ADR scheme to consumers, and will therefore run alongside the existing requirement. This is regrettable for a number of reasons.

First, the ODR Platform attempts to facilitate the resolution of a dispute, rather than actually resolving it, and works by referring customer disputes to approved national ADR entities. However, all Commission-approved ADR entities listed as competent to hear disputes in the remote gambling sector are also approved for the purposes of the ODR Platform (save for the Isle of Man Gambling Supervision Committee, due to stop operating this
service on 4 March 2016). This means that submitting a complaint via the ODR Platform merely provides a more convoluted method of achieving, in effect, the same result. Requiring a link to the ODR Platform to sit alongside the existing signposting to ADR entities means it is presented as an alternative, which it’s plainly not. This cannot be right, and serves only to cause confusion for British punters.

Second, the guidance that a link must be provided in all email “offers” has the potential to be widely construed, and it’s not clear from the ADR Regulation where this requirement has come from. Regulation 19(2) requires every trader to provide a consumer with information regarding the availability of ADR “when the trader has exhausted its internal complaint handling process”. Requiring a link to be provided in all email marketing
communications goes well beyond this requirement, and suggests a need to highlight the availability of ADR at the outset of a customer relationship, and not just when a complaint is in contemplation (which would be this author’s suggestion).

The current position leaves British licensed operators obliged to introduce these additional information requirements (or risk enforcement action), whilst acknowledging that they are more likely to cause customer confusion than facilitate the resolution of customer disputes.