We Can Work It Out-On the Web

Squabbling with your eBay customer or building contractor? Duke it out more productively with online dispute resolution.

By Lisa Moskowitz

March 14, 2001

If face-to-face confrontations make you a little queasy, online dispute resolution just might be your panacea. Instead of wincing as someone yells at you, or shouting back instead, you can swap demands and respond at your leisure with a cool head.

Like traditional in-person dispute resolution, the online alternative offers three approaches: direct negotiation, mediation or binding arbitration (with an impartial "judge"). While the cast of characters may be similar, the online environment can make it easier for people involved in a dispute to "meet" and resolve the problem. In some cases-for example, "blind-bidding" systems that help to find a fair payment amount-software is available that can handle the job without the help of a human intermediary.

Among early online success stories is SquareTrade, which has mediated some 50,000 cases in 85 countries and five languages since launching in February 2000, according to co-founder Steven Abernathy. Of those, 85 percent have been resolved via direct negotiation. "Our technology actually helps drill down into the issues to take out the animosity," says Abernathy.

In late February, the third annual Alternative Dispute Resolution Cyberweek, a virtual conference, offered a forum for discussing the pros, cons and future of online dispute resolution. Sponsored by the University of Massachusetts Center for Technology and Dispute Resolution, Cyberweek 2001 gathered more than 750 participants from more than 35 countries, according to the Center.

Taking A Cool Look

"I'm not a fan of real-time dispute resolution," says Cyberweek founder Ethan Katsh, professor of legal studies at University of Massachusetts. "Here we have the opportunity to do it asynchronously, which means people can think very hard about what they want to say."

"Parties get 'cooling distance' that lets them consider their responses instead of escalating into damaging territory," declares Colin Rule, co-founder of OnlineResolution, a dispute-resolution Web service.

Online dispute resolution also costs less than conventional face-to-face mediation, proponents say. It lets parties from different time zones or countries resolve disputes more conveniently. And it creates a non-jurisdictional process that crosses time and borders.

In fact, the ability to address disputes in any country in any language at any time empowers consumers without restricting them, Rule declares. It could someday save you from waiting for a court date or dealing with strange or even corrupt legal systems.

Transactions and Relationships

There are essentially two kinds of disputes: one deals with transactions, the other with relationships.

Online technology deals quite well with transactional disputes, such as a party seeking fair payment for a product. Often these types of issues can be resolved using the technology alone. For example, blind-bidding sites like ClicknSettle and CyberSettle offer an automated service where parties individually enter the price they're willing to pay or receive. The software evaluates these numbers and then sends each party a fair price based on their initial demand.

Relational disputes are more complex, often requiring direct negotiation. Here, an aggrieved party submits his or her issue along with contact information for the other party. The online services contact the second party, and if he or she agrees to the negotiation, the two parties can then discuss the issue privately online. This service is free at most online dispute resolution sites.

When the two parties log on, they identify the marketplace associated with their dispute, such as an online auction. SquareTrade, to take one example, then offers a drop-down menu of the most common issues in that arena. If you say you've received damaged goods, it proposes some possible resolutions: would you prefer to get an undamaged replacement, return the merchandise for a full refund, keep the merchandise and accept a partial refund, or write out a custom option? This guided approach helps to defuse some emotion, Abernathy says.

If direct negotiation fails to resolve the issue, SquareTrade users can request a mediator for a $20 fee per participant plus a percentage fee if the dispute exceeds $1,000. At OnlineResolution, mediation fees range between $15 and $25 dollars. For disputes of more than $500, participants each pay $50 per party per hour scaling up to $150 per party per hour, based on the value under dispute, Rule says.

Helping e-Markets

For those selling online, "effective dispute resolution can actually retain customers," says Abernathy. "They are more likely to purchase again despite the dispute because you honored the problem; you've taken them through the desert."

SquareTrade offers a merchant seal program: for a fee, it will do a background check and then award a seal of approval that lets consumers know a particular site honors disputes.

Additionally, the site customizes its services for specific marketplaces. Working with eBay, SquareTrade has created-and charged for-a service just for the online auction space. eBay subsidizes the cost; in return, the site gains consumer trust.

Emotional Rescues

Big issues remain, though. One of Cyberweek's most popular discussions was on emotions and nonverbal communication online.

"I think people can express their emotions very well online," comments Katsh. "The bigger challenge is how do you deal with somebody's anger? It's not easy to do face-to-face, and it's certainly not easy to do online."

Using emoticons and bold block text might be one way of expressing yourself, some participants suggested. But without physical cues, how can you tell if a party is telling the truth?

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"You can't get the intensity and non-verbal communication online that you can get face to face," says Rule. "Also, people are sometimes more likely to lie online because they know it's harder for them to get caught. Since you can't look them in the eye, they feel safer not telling the truth."

In the future, audio and video capabilities might do away with some of these disadvantages. In the meantime, as one Cyberweek participant suggested, these issues may very well simply add new twists to our age-old habits of negotiation.