Arbitration Law Review
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eBay's De Facto Low Value High Volume
Resolution Process: Lessons and Best Practices for
ODR Systems Designers
Louis F. Del Duca
Colin Rule
Kathryn Rimpfel
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(-#+%-(%#'-%,"*0'#&) % eBay's De Facto Low Value High Volume Resolution Process: Lessons and Best Practices
for ODR Systems Designers Y.B. Arb. & Mediation
204
EBAY’S DE FACTO LOW VALUE HIGH VOLUME RESOLUTION PROCESS:
LESSONS AND BEST PRACTICES FOR ODR SYSTEMS DESIGNERS
By
Louis F. Del Duca, Colin Rule, and Kathryn Rimpfel
*
Table of Contents
I. THE EVOLUTION OF EBAY’S DE FACTO, “LOW VALUE – HIGH VOLUME” FAST TRACK ODR
SYSTEM ............................................................................................................................. 204
II. BASIC EBAY DISPUTE RESOLUTION SYSTEM ..................................................................... 206
A. Buyers’ Claims – “Item Not Received,” “Item Not as Described” ................................ 207
B. Sellers’ Claims – “Unpaid Item” Fee ............................................................................. 208
III. PURCHASE PROTECTION SYSTEMS FOR SPECIFIC TYPES OF GOODS – MAXIMUM AND
MINIMUM PURCHASE PRICE LIMITS ON THE AMOUNT IN CONTROVERSY ..................... 210
A. eBay’s Vehicle Purchase Protection (VPP) and Business Equipment Purchase Protection
(BEPP) Programs ............................................................................................................ 210
IV. USING LIMITATIONS ON TYPES OF CLAIMS, LISTS OF CLAIMS AND LOW VALUE
FRAMEWORKS TO SUPPORT ODR SYSTEMS RESPONSIVE TO PRIVATE AND PUBLIC
NEEDS ............................................................................................................................. 214
A. eBay Explicit Limitation of Types of Claims and List of Specific Claims – Consequential
Damages Excluded by “Money Back Guarantee” .......................................................... 214
B. UNCITRAL Explicit Limitation of Types of Claims and Pending List of Specific
Claims – Consequential Damages Not Explicitly Excluded ........................................... 215
V. CONCLUSION: LESSONS AND BEST PRACTICES FROM THE EBAY EXPERIENCE FOR ODR
SYSTEMS DESIGNERS ....................................................................................................... 217
I. THE EVOLUTION OF EBAY’S DE FACTO, “LOW VALUE – HIGH VOLUME” FAST
TRACK ODR SYSTEM
Among privately created online dispute resolution systems, the eBay Resolution
Center stands alone. eBay’s process has resolved more disputes over a longer period of
time than any other online dispute resolution process in the world. Launched in 1995,
eBay was designed to be the largest global online marketplace, evolving from its roots in
consumer-to-consumer (C2C) auctions into Business-to-Business (B2B) and Business-to-
Consumer (B2C) verticals. After it acquired PayPal in 2002, eBay set about building a
robust, end-to-end Trust and Safety infrastructure. A core tenet of that infrastructure is
the Resolution Center, an online redress process provided to every eBay and PayPal user
*
Louis Del Duca is the Edward N. Polisher Distinguished Faculty Scholar Emeritus at the Penn State
Dickinson School of Law. Colin Rule is formerly Director of Online Dispute Resolution for eBay and
PayPal and presently CEO of Modria.com. Kathryn Rimpfel, The Penn State Dickinson School of Law,
J.D. 2014. We wish to express thanks for the excellent research assistance in preparation of this article to
Lina Ali, Research and Teaching Assistant, University of Basel, Switzerland; Brian Cressman The Penn
State Dickinson School of Law, J.D. candidate 2015; and Jeremy O’Steen The Penn State Dickinson
School of Law, J.D. 2014.
205
in the world, customized to address most of the dispute volume that arises between
buyers and sellers that utilize eBay’s services around the world.
1
The Resolution Center was created with the aim of addressing the typical disputes
arising out of purchases within eBay’s marketplaces, which usually average about $70-
100 in value.
2
The eBay platform currently handles over 60 million e-commerce disputes
annually through a process that enables parties to resolve their problems amicably
through direct communication. The number of disputes being resolved through eBay’s
online platform is expanding steadily as the transaction volume on the site increases at
about 13% per year.
3
More than $45 billion in merchandise is sold on eBay each year,
and eBay has more than 90 million active buyers and sellers, in 16 languages and 36
countries around the globe as well as Hong Kong.
4
Since the launch of its original dispute resolution system, which focused only on
letting buyers report “fraud alerts,” eBay has expanded to support dispute resolution in a
variety of other problem types, such as “item not received” and “item not as described”
disputes (where the buyer is the complainant), or “unpaid item”
5
disputes (where the
seller is the complainant).
6
eBay has also added resolution platforms dedicated
specifically to several categories of purchases, including the Vehicle Purchase Protection
(hereinafter VPP) and Business Equipment Purchase Protection (hereinafter BEPP)
programs, each with specific minimum and maximum price limitations.
7
These
developments have enhanced eBay’s initial programs focused on low value, high volume,
1
See ARNO R. LODDER & JOHN ZELEZNIKOW, ENHANCED DISPUTE RESOLUTION
THROUGH THE USE OF INFORMATION TECHNOLOGY 8 (2010).
2
See Corporate Fact Sheet: Q4 2010, EBAY INC. (2010),
http://www.ebayinc.com/content/fact_sheet/ebay_inc
corporate_fact_sheet_q4_2010_
(last visited June
21, 2014).
3
See id.
4
See id. (eBay.com identifies the following countries and Hong Kong as countries for which it has a
website: Argentina, Austria, Australia, Belgium, Brazil, Canada, China, Czech Republic, Denmark,
Finland, France, Germany, Greece, Hungary, India, Ireland, Italy, Korea, Malaysia, Mexico,
Netherlands, New Zealand, Norway, Philippines, Poland, Portugal, Russia, Singapore, Spain, Sweden,
Switzerland, Taiwan, Thailand, Turkey, United Kingdom, Vietnam); see also id. (for statistics on number
of sales and users).
5
In the eBay system, buyers are required to pay for the item before the seller ships it. In cases of direct
sales rather than auction sales, sellers are required to be paid prior to the shipment of item. The seller is
therefore unpaid only in the auction sale cases where a buyer who is the successful bidder does not forward
the bid amount to the seller. In this situation eBay allows the seller to recover for the “unpaid item” fee
(This is a “Final Value Fee,” usually 1 to 2% of the purchase price) paid by the seller to eBay for the use of
the eBay platform. This is also discussed infra at Section II(B).
6
eBay Money Back Guarantee, EBAY (APRIL 3, 2014), http://pages.ebay.com/help/policies/money-back-
guarantee.html [hereinafter “eBay Money Back Guarantee Policy”].
7
eBay Vehicle Purchase Protection, EBAY (April 3, 2014), http://pages.motors.ebay.com/buy/purchase-
protection/index.html [hereinafter “VPP Policy”]; eBay Business Equipment Purchase Protection, EBAY
(April 3, 2014) http://pages.ebay.com/help/buy/business-protection.html [hereinafter “BEPP Policy”]. Both
documents are included in the appendix.
206
B2C transactions, with more in-depth specialized claims processes relating to higher
dollar value purchases.
8
The eBay ODR system, from the outset, has had a de facto low value framework
because it was packaged as a kind of money-back guarantee –- recovery is limited to the
purchase price for the buyer, and full reimbursement for the seller. This necessarily
excludes an award of consequential damages. Higher dollar value purchases, however,
require different kinds of protection and resolution. eBay’s specialized procedures for
vehicles and equipment disputes, for instance, require equipment claims to involve more
than $1,000 and less than $20,000, and vehicle claims to be more than $100 and less than
$50,000.
9
Only disputes involving vehicles or equipment which fall within the minimum
and maximum requirements are eligible to be handled by these special ODR processes.
For example, take a traditional sale conducted through eBay’s platform for a cell
phone. Buyer pays through one of eBay’s approved payment methods (such as PayPal),
and Seller ships the phone and it arrives in the stated amount of time. However, due to a
malfunction stemming from a defect in the cell phone battery, the phone causes a fire in
Buyer’s home and also results in serious burns to Buyer, his wife and two children.
Though this damage directly results from the deficiency of the item exchanged in the
eBay sale, Buyer will have no recourse through the eBay ODR platform for the
consequential damages. Though Buyer can claim that the phone did not arrive as
described – i.e. fully functional - the eBay Money Back Guarantee inherently limits
recovery to the price of the item. Thus, although Buyer may seek to recover the
consequential damages in a judicial proceeding or other fora, recovery of consequential
damages is excluded from the ODR process. eBay has learned from extensive experience
that this level of protection is adequate to reassure most eBay buyers that they will be
protected.
The eBay system can serve as an example of best practices in limiting the types of
claims and amount of recovery to place parameters to create a low-value framework to
facilitate fast-track, fair, and low-cost ODR. We discuss infra the differences in
procedural details of resolving disputes of different types of products covered by the
basic, equipment and vehicle protection programs.
II. BASIC EBAY DISPUTE RESOLUTION SYSTEM
10
In the basic eBay resolution system, administered in conjunction with PayPal,
eBay provides both buyers and sellers a guided process for resolving disputes over
purchases made through its site. In the initial step, eBay asks the buyer to diagnose the
8
See VPP Policy, supra note 7; BEPP Policy, supra note 7.
9
See VPP Policy, supra note 7; BEPP Policy, supra note 7.
10
This section describes the ODR system from the perspective of both the buyer and the seller. This
description is based on the information provided for the benefit of customers on the eBay website, on a
page previously cited as the “eBay Money Back Guarantee Policy,” supra note 6. This section is citing to
that source of authority unless indicated otherwise.
207
specifics of their complaint, and to suggest a preferred resolution. eBay then encourages
the buyers and sellers to communicate directly through its messaging platform. If the
matter cannot be resolved through negotiation, the dispute then can be escalated to the
Resolution Services team within Customer Support. Once at this stage, the Resolution
Services team evaluates the buyer’s claims and makes a decision about who is right and
who is wrong.
The eBay Money Back Guarantee is outlined in a policy found on the eBay
website that lists the types of claims that are and are not covered. This policy again
confines claims to situations where the item never arrived or the item was not as
described in the seller’s listing. Then, the policy places certain procedural restrictions on
claims, such as: (1) the case being opened no later than 30 days after actual or latest
estimated delivery date; (2) the purchase was made with the “Pay Now” option or an
eBay invoice; (3) the buyer used one of the five designated payment methods
11
; and (4)
the item was paid for in a single payment. The Money Back Guarantee specifically does
not cover certain categories of sales and sales through eBay’s affiliate sites, such as
half.com.
12
In addition, this guarantee prohibits duplication of claims through other
dispute resolution methods, such as the PayPal Purchase Protection programs or
requesting a chargeback from the payment provider.
A. Buyers’ Claims – “Item Not Received,” “Item Not as Described”
The current Resolution Center web page leads buyers and sellers through the
process through a series of questions that both set different claims on different tracks and
prevent the furtherance of claims that are outside the coverage of eBay’s policy. The
initial screening still adheres to the two primary bases for buyer claims: that the item did
not arrive, that the item did not match seller’s description. The website then presents
options for how to proceed, after the claimant has been funneled into a particular
category of claims. Throughout the process, there are links to eBay’s general policy,
which outlines what claims are and are not qualified.
The Money Back Guarantee also limits the applicable disputes through specific
exclusions from coverage, as listed in its policy:
11
These five payment methods are those available to the buyer through the eBay platform They include 1)
PayPal; 2) ProPay; 3) Skrill; 4) Credit or debit card; and 5) Bill Me Later. PayPal, ProPay and Skrill are
digital payment services that allow users to send and receive money without revealing personal financial
details. See “About Skrill” SKRILL (April 29, 2014) https://www.skrill.com/en-us/about-us/; “Company
History” PROPAY (April 29, 2014) http://www.propay.com/propay-company/company-history/; “About
PayPal” PAYPAL (April 29, 2014) https://www.paypal-media.com/about. Bill Me Later, a PayPal
subsidiary, is also a digital payment option. However, it is a service that extends the user a line of credit.
See “About Bill Me Later” BILL ME LATER (April 29, 2014)
https://www.billmelater.com/about/index.xhtml. PayPal is owned by eBay, and Bill Me Later is a service
provided by PayPal. ProPay and Skrill are third party, private online payment services. Credit or debit cards
(such as Visa, MasterCard, and American Express) are payment systems administered by banks.
12
An eBay subsidiary, half.com specializes in the sale of books, textbooks, music, movies and games for
fixed prices set by sellers, as opposed to eBay’s bidding system.
208
“Buyer’s remorse or any reason other than not receiving an item or receiving an
item that isn’t as described in the listing.”
“Duplicate claims through other resolution methods.”
“Items shipped to another address after original delivery.”
Vehicles (instead, must be pursued through the eBay Vehicle Protection Program)
Real Estate, Business & Websites for Sale, Classified Ads, services
Some business equipment categories (instead, must be pursued through the eBay
Business Equipment Purchase Protection Program)
“Items purchased on half.com, eBay Wholesale Deals, or eBay Classifieds”
13
Buyers have 30 days from the actual or estimated delivery date to make direct
contact with the seller through the eBay platform. If this direct contact does not resolve
the problem within three business days of buyer’s initial communication to the seller, the
buyer can choose to escalate the case to eBay. If the buyer escalates the case to the
Resolution Center, eBay will review the case and contact the buyer within 48 hours with
a determination of whether the case qualifies for a refund of the full purchase price plus
original shipping.
B. Sellers’ Claims – “Unpaid Item” Fee
Sellers” claims are handled somewhat differently than buyers’ claims. Like the
buyer resolution process, new disputes are reported through the Resolution Center. But
per-transaction exposure is significantly smaller for sellers than for buyers. If a buyer has
a dispute, they have likely already paid the seller the full purchase price for the item,
which averages around $75 for non-receipt cases and $100 for not-as-described cases.
13
These parameters for applicable disputes under the basic eBay ODR policy have evolved as eBay gained
experience with using the process. Previously, eBay provided more examples to guide the interpretation of
“item not delivered” or “item not matching seller’s description in the listing.”. In a version of the policy
dating back to approximately 2010, the restrictions were phrased in checklist form as follows:
[1.The buyer did not receive the items within the estimated delivery date; or
2. The item received was wrong, damaged, or different from the seller’s description. For example:
i. Buyer received a completely different item;
ii. The condition of the item is not as described;
iii. The item is missing parts or components;
iv. The item is defective during the first use;
v. The item is a different version or edition from the one displayed in the listing;
vi. The item was described as authentic but is not;
vii. The item is missing major parts or features, and this was not described in the
listing;
viii. The item was damaged during shipment, or;
ix. The buyer received the incorrect amount of items.]
This version of the policy was addressed in Louis Del Duca, Colin Rule & Zbynek Loebl, Facilitating
Expansion of Cross-Border E-Commerce – Developing a Global Online Dispute Resolution System
(Lessons Derived from Existing ODR Systems – Work of the United Nations Commission on International
Law, 1 PENN ST. J. L. & INT’L AFFAIRS 59, 65 (2012).
209
The buyer is concerned that they will not get their purchase price back, so their exposure
is significant.
Sellers, on the other hand, are clearly instructed to not ship the item in question
before payment is received from the buyer. So if a buyer wins an auction and does not
follow through with payment, the seller is only out the “Final Value Fee” paid to eBay as
part of the sale (usually less than 1-2% of the purchase price). For sellers, disputes are
part of doing business on eBay (Unpaid auction bids are not uncommon), but they are
more of a nuisance than a source of major risk exposure.
Once an auction bid is reported as unpaid, Buyer is contacted and given several
response options: a) pay for the auction bid, b) prove the auction bid is already paid for,
or, c) request that the transaction be cancelled. Once the buyer responds, the seller and
buyer can communicate to attempt to resolve the issue through mutual agreement.
However, if the buyer does not respond, or the seller is not satisfied, the seller has the
unilateral right to give the buyer an “Unpaid Item Strike.”
14
If a buyer receives too many
Unpaid Item Strikes in too short a period of time, the buyer’s account on eBay will be
suspended.
This process, which handles tens of millions of disputes every year, is entirely
automated through technology, with no human involvement. The only human
involvement that enters into the Unpaid Item resolution process is when the buyer
decides to appeal an Unpaid Item (i.e. auction bid) Strike they have received. If it is the
buyer’s first appeal of an Unpaid Item Strike, the appeal is automatically granted (and the
vast majority of appeals are first appeals). However, if the appeal is for a second or later
strike, an eBay Customer Service Representative will manually review the case to make a
determination. In this fashion, an ODR system delivering tens of millions of resolutions
per year requires only tens of thousands of human interventions to keep operating in a
trusted and effective fashion.
14
eBay provides information through its Feedback system to facilitate identification of reliable sellers and
buyers and keep market participants honest. eBay assigns parties a “star” based on how many positive
reviews they have received. The feedback system, like the dispute resolution system, treats buyers and
sellers differently. Buyers can leave positive, neutral or negative ratings while sellers can only leave short
comments and positive ratings. eBay is very clear that feedback extortion and manipulation is not allowed.
Sellers can report buyers in violation of the buying practices policy, especially when successful auction
bids are not paid by the buyer. This report can result in a “strike” against the buyer. See Del Duca, Rule &
Loebl, supra note 13, at 64-65 (citing how do I leave Feedback?, EBAY, INC. (June 20, 2011),
http://pages/ebay.com/help/feedback/questions/leave.html (last visited April 4, 2012). eBay’s Unpaid Item
policy, detailing Unpaid Item Strikes (sometimes called “unpaid item violations” or “excessive unpaid
items”) is detailed at http://pages.ebay.com/help/policies/unpaid-item.html. As the policy page states,
“eBay may record the unpaid item on the buyer's account …excessive unpaid items on a buyer's account
may result in a range of consequences, including limits on or loss of buying privileges.”
210
III. PURCHASE PROTECTION SYSTEMS FOR SPECIFIC TYPES OF GOODS – MAXIMUM
AND MINIMUM PURCHASE PRICE LIMITS ON THE AMOUNT IN CONTROVERSY
As eBay’s Basic Money Back Guarantee program specifically prohibits claims
relating to sales of certain categories of products – usually either intangibles or higher-
cost items such as vehicles, real estate, and business equipment – this form of online
dispute resolution is somewhat incomplete, or at least does not match the breadth of sales
transactions taking place on eBay’s platform. In addition to the more basic ODR system
provided as part of the Money Back Guarantee, eBay has developed two category-
specific ODR systems to expand dispute resolution options for those using its services.
These new systems include the Vehicle Purchase Protection (VPP) and the Business
Equipment Purchase Protection (BEPP) programs. The VPP serves as the dispute
resolution forum for the sale of vehicles priced at more than $100 and less than $50,000,
and purchased through certain designated categories within eBay’s site. The BEPP
applies to sales with a final price of at least $1,000 but no more than $20,000, again
through certain designated categories (such as Business and Industrial) within eBay’s
website.
Just as with the traditional eBay Money Back Guarantee, the VPP and BEPP both
limit the types of claims that are covered – i.e. the claims that can be pursued through
their ODR process. However, due to the higher price of the items involved, Ebay’s
policies defining those claims are much more detailed than the simple choice between an
item never being delivered or not being as described in the seller’s listing. The following
chart details the limitation of claims in both the VPP and BEPP systems:
A. eBay’s Vehicle Purchase Protection (VPP) and Business Equipment Purchase
Protection (BEPP) Programs
Vehicle Purchase Protection
15
Business Equipment Purchase
Protection
16
Situations
Covered
You pay for a vehicle and never
receive it.
You send a refundable deposit for a
vehicle and never receive it.
You pay for a vehicle and receive it
but suffer losses because:
o The vehicle was determined by a law
enforcement agency to have been
stolen at the time of the end of the
listing.
o The vehicle has an undisclosed or
unknown lien against its title.
Paying for an eligible item and
never receiving it.
Sending a deposit for an eligible
item and never receiving the item.
Paying for and receiving an
eligible item the buyer can't
legally own because:
o It's stolen property
o It's subject to an undisclosed
or unknown lien
Paying for and receiving an
eligible item that's a different
15
The information in this column was quoted from the VPP Policy, supra note 7.
16
The information in this column was quoted from the BEPP Policy, supra note 7.
211
o The vehicle make, model or year is
different than what was described in
the seller's listing at the time you
placed your bid or offer.
o A title is required for the vehicle by
your state and the seller's state but
you did not receive a title from the
seller and it is not possible to obtain
a title from the appropriate DMV.
o The vehicle has a title with an
undisclosed salvage,
rebuilt/rebuildable, unrebuildable,
reconstructed, scrapped/destroyed,
junk, lemon, manufacturer buyback,
or water damage brand at the time of
the end of the listing. (This
protection is not available for
vehicles listed in the Dune Buggies,
Race Cars or Trailers categories.)
o The vehicle is less than 20 years old
and has more than a 5,000 mile
odometer discrepancy from the
mileage as stated in the seller's
listing. (This protection is only
available for vehicles listed in the
Cars & Trucks and RVs & Campers
categories.)
o In addition, the VPP also provides
protection against certain
undisclosed damage for vehicles that
are less than 10 years old (10 year
threshold is based on model year):
The vehicle had undisclosed engine,
body, transmission, and/or frame
damage at the time of purchase that
will cost more than $1,000 to repair.
The cost of repair to any one of those
components must exceed $1,000. For
vehicles in the Boats (engine and
hull only), Buses, Commercial
Trucks, and RVs & Campers
categories, the cost of the
undisclosed engine, body,
transmission, or frame damage must
exceed $1,500. Race Cars are not
eligible for this protection. Vehicles
type, make, or model than what
was described in the listing,
provided the amount of
devaluation to the item due to the
misrepresentation exceeds $1,500.
Paying for and receiving an
eligible item with undisclosed
damage, provided the cost of
necessary repairs exceeds $1,500
and the item was advertised as
being less than 10 years old. The
program covers only defects and
damages that prevent the
equipment from functioning, not
defects or damage that are
cosmetic or not critical to operate
the equipment.
212
that are subject to a recall for this
type of damage are not eligible for
VPP.
Situations
Not
Covered
Vehicle Condition
Any damage on vehicles 10 years old
or older (10 year threshold is based on
model year)
Regular maintenance and fluid levels.
Normal wear and tear, including but
not limited to belts, hoses, tires,
brakes, bushings, joints, spark plugs
and wires, interior features, minor
dents, paint chips and scratches.
Certain components - Damage to any
component other than the engine,
transmission, frame or body, including
but not limited to the vehicle's
interior, exhaust, air conditioner,
electrical, suspension, cooling system,
turbo charger, fuel system,
differential, clutch/torque converter,
and/or pollution control devices.
Damage threshold - Damage to an
eligible component that does not
exceed $1,000 (or $1,500 for boats,
buses, commercial trucks, RVs and
campers).
Damageafterpurchase-
Damageorlossarisingduringshippingor
otherwiseafterpurchase.
Cosmetic damage, such as paint or
external surface rust.
Unverifiable damage.
Deposit issues
Sending a non-refundable deposit for a
vehicle and not receiving the vehicle, or a
refund, because you chose to not complete
the transaction or pay the remaining
balance for any reason.
Ancillary losses
Punitive claims, lost profits, loss of work,
travel expenses, or restocking costs.
Title / ownership issues
Failure to disclose a title brand if
another title brand was disclosed in the
listing, or if the title was described in
Any damage on an item that's
more than 10 years old. If the
model year is not specified in the
eBay listing, then the item isn't
eligible for any undisclosed
damage.
Regular maintenance
Normal wear and tear, including
but not limited to rust, dents, and
scratches, or cosmetic damage that
doesn't impair the item
Sending a non-refundable deposit
and not receiving the item or a
refund, because the buyer chooses
to not complete the transaction or
to not pay the remaining balance
Any damage or defect that was
explained to or noticed by the
buyer prior to purchase, or (if the
buyer picked up the item from the
seller in person) that could have
been noticed upon reasonable
inspection by the buyer
Items not listed on eBay Business
in one of the capital equipment
categories
Items purchased for less than
$1,000
Items damaged or lost in shipping
Inspection costs, warranty fees,
and other related expenses
Buyer's remorse
Any repairs or alterations made to
the item after the listing end date,
that were not authorized by the
third-party provider of the
Business Equipment Purchase
Protection program
213
the listing as anything but "clear".
Failure to receive a certificate of title
for a vehicle that was listed with a title
brand or with the title being
described as anything but "clear".
Receiving a title that is not signed, is
improperly assigned, or receiving a
title but not being able to register the
vehicle.
Any damage on a vehicle that was
listed with a title brand or with the title
being described as anything but
"clear".
Losses based on a vehicle classified as
"theft recovery" or "previously stolen"
but recovered by a law enforcement
agency prior to being listed on eBay.
Other
Differences in sub-model, trim
packages, special editions, or options
if you have received the year, make,
and model described in the listing.
Buyer's remorse.
Any damage or listing discrepancies
that were disclosed to you prior to
acceptance of the vehicle.
Any damage that could have been
discovered upon a reasonable
inspection before you paid for and
picked up the vehicle in person.
Any damage that does not impact the
safety or operability of the vehicle.
Repairs or alterations made by you to
the vehicle without the consent of the
VPP Administrator.
Inspection costs, warranty fees, taxes
paid, or any other fees or expenses that
are not expressly covered under
these Terms and Conditions.
Transactions occurring directly
between the parties (i.e. phone, email,
mail, in person, by overnight
messenger, etc...) and/or on another
website rather than through the eBay
website.
214
This extensive detailed list of types of permissible claims actually limits the types
of claims that eBay will handle under these two new programs. In addition, for these
Vehicle (VPP) and Equipment (BEPP) programs, only claims which are within the
specified minimal and maximum permissible amounts are handled by eBay. While both
the VPP and BEPP place limits on the permissible amount of a claim ($50,000 maximum
and $100 minimum for the VPP, and $20,000 maximum and $1,000 minimal for the
BEPP), the “Money Back Guarantee” further limits the amount of the permissible claim
to the amount of the purchase price of the item(s) involved.
For example, a dispute involving a vehicle sold for $30,000 falls within the
$50,000 maximum/$1,000 minimum requirement and therefore would be handled by
eBay, with application of the “Money Back Guarantee” policy limiting the amount of the
claim actually recoverable to the $30,000 purchase price. A dispute involving a vehicle
which was sold for $150,000 would not be handled by eBay because it exceeds the
$50,000 maximum.
In a BEPP case, a dispute involving sale of equipment for $10,000 would fall
within the $20,000 maximum and $1,000 minimum requirement and would be handled
by eBay. A dispute involving equipment which was sold for $40,000 would not be
handled by eBay because it exceeded the $20,000 maximum.
IV. USING LIMITATIONS ON TYPES OF CLAIMS, LISTS OF CLAIMS AND LOW VALUE
FRAMEWORKS TO SUPPORT ODR SYSTEMS RESPONSIVE TO PRIVATE AND PUBLIC
NEEDS
A. eBay Explicit Limitation of Types of Claims and List of Specific Claims –
Consequential Damages Excluded by “Money Back Guarantee”
eBay’s explicit limitation of types of claims has been addressed, supra. The
“Money Back Guarantee” purchase price limited remedy with its built-in exclusion of
consequential damages produces a de facto low value framework in all three eBay
dispute resolution programs. This approach facilitates fast track, fair, low-cost online
dispute resolution of low value claims across the board for ODR systems generally,
including the “negotiation—facilitated negotiation” and the “negotiation—facilitated
negotiation—mandatory arbitration” two-track model currently being considered by the
UNCITRAL ODR Working Group III.
17
17
At the twenty-sixth session, November 5-9, 2012, Working Group III identified the need for a two-track
system to accommodate differences in the substantive law of jurisdictions in which pre-dispute arbitration
agreements are valid and binding in business to consumer (B-to-C) contracts, and the substantive law of
jurisdictions in which pre-dispute arbitration agreements in business to consumer (B-to-C) contracts are
invalid and not binding.
Under the two-track system, Track I provides an online negotiation stage between the parties, followed
by a facilitated negotiation stage in which a neutral is added to the deliberations, and a third arbitration
phase if the dispute is not resolved in phase one or two.
The proposed Track II involves comparable negotiation and facilitated negotiation phases, but does not
require arbitration in the event the dispute is not resolved in the negotiation or facilitated negotiation
phases. Online Dispute Resolution For Cross-Border Electronic Commerce Transactions: Draft Procedural
Rules, Note by the Secretariat, U.N. Doc. A/CN.9/WG.III/WP.127 at p. 2 (Jan. 17, 2014).
215
The equivalent of this “Money Back Guarantee” is achieved in eBay’s VPP
program by its explicit exclusion of claims relating to “ancillary losses” such as “punitive
claims, lost profits, loss of work, travel expenses, or restocking costs.”
18
The equivalent
of the “Money Back Guarantee is achieved in eBay’s BEPP eBay program by explicitly
permitting recovery “only up to the devaluation or repair amount of the item or the final
purchase price, whichever is lower.”
19
The “Money Back Guarantee” purchase price limited remedy and its VPP and
BEPP equivalents also will self-adjust with the fluctuation in the value of currencies in
the marketplace over time, as well as between developed, developing, and
underdeveloped economies at any single point in time. eBay sets the coverage thresholds
specifically in policies so that all buyers and sellers understand the coverage eligibility
guidelines and maximum refunds prior to engaging in any purchase in the first place.
There are slight differences in the coverage and eligibility levels by broad geographic
region, but the levels change very rarely and are intended to cover 95% of transactions
within a given geography and category.
B. UNCITRAL Explicit Limitation of Types of Claims and Pending List of Specific
Claims – Consequential Damages Not Explicitly Excluded
The current UNCITRAL draft. Rule explicitly limiting types of permissible
claims provides that:
These rules shall only apply to claims:
(a) that goods sold or services rendered were not delivered, not timely
delivered, not properly charged or debited, and/or not provided in conformity
with the agreement made at the time of the transaction; or
(b) that full payment was not received for goods or services provided.
20
This language in Article 1(2) incorporates the eBay basic “item not received” and
“item received but not as described” types of claims for buyers and a full payment
remedy for sellers. While this is not the forum to discuss in detail the similarities and
differences between the eBay and proposed UNCITRAL types of claims covered, we
note in passing that the UNCITRAL system in addition to permitting the sale of goods
types of claims permitted by eBay, also would permit claims pertaining to rendition of
services.
21
Service related disputes are much more complicated to resolve, because a) a
18
VPP Policy, supra note 7. See VPP document, in appendix.
19
BEPP Policy, supra note 7. See BEPP document, in appendix.
20
Online Dispute Resoltuion For Cross-Border Electronic Commerce Transactions: Draft Procedural Rules,
Note by the Secretariat, U.N. Doc. A/CN.9/WG.III/WP.127 (Jan. 17, 2014) (emphasis added). eBay’s
specific “seller unpaid” and “unpaid item fee” remedy is not incorporated into the UNCITRAL draft. See
discussion of eBay “unpaid item”, supra Section II(B). At this stage of development UNCITRAL has not
incorporated an auction type of transaction into its program.
21
Id. at Article 1 indent 2
216
return of the goods in question is not an option, and b) the evaluation of item condition or
service quality is often opinion based and difficult to evaluate.
Unlike the eBay program, which at the outset clearly limits recovery to the Money
Back Guarantee for buyers or payment of price for sellers, the UNCITRAL rules do not
explicitly set forth this limited remedy. This may lead to downstream confusion and
concern about how much liability a buyer or seller is taking on by participating in the
UNCITRAL ODR process. UNCITRAL may wish to explicitly incorporate appropriate
language into the Rules or elsewhere, perhaps in the “documents” provided for in the
Preamble to the Rules, to clearly limit recovery to the Money Back Guarantee full
payment.
22
The detailed list of specific claims of ‘item not received’ or ‘items received but
not as described by seller’ comparable to the detailed eBay lists discussed supra has yet
to be developed and incorporated into the Rules or elsewhere, (perhaps in the document
on Substantive Legal Principles
23
) envisaged by the text of the Preamble.
The Preamble to the Rules currently reads as follows:
1. The UNCITRAL online dispute resolution rules (“the Rules”)
are intended for use in the context of disputes arising out of cross-
border, low-value transactions conducted by means of electronic
communication.
2. The Rules are intended for use in conjunction with an online
dispute resolution framework that consists of the following
documents [which are attached to the Rules as an Appendix]:
[(a) Guidelines and minimum requirements for
online dispute resolution
providers/platforms/administrators;]
[(b) Guidelines and minimum requirements for
neutrals;]
[(c) Substantive legal principles for resolving
disputes;]
22
Under the eBay policies, as described above and infra, consequential damages are not specifically
excluded or included, but are clearly excluded by the limited Money Back Guarantee. Similarly the
Mexican Consumer Protection Code provides:
Article 92. – At their choice, consumers shall be entitled to the substitution of
the product or the return of the amount paid against the delivery of the product
acquired.
art. 92, available at http://www.profeco.gob.mx/juridico/pdf/l lfpc 06062006 ingles.pdf. (last visited 8 May
2014).
The Mexican platform Concilianet, which is the Mexican agency handling its ODR system also
advises the public that no recovery is possible for consequential damages and informs the public of the
consumer’s right to recover such damages in court.
http://concilianet.profeco.gob.mx/concilianet/faces/que_es.jsp (translated using Google Translate on Sept.
19, 2011).
23
See infra Preamble, indent 2(c).
217
[(d) Cross-border enforcement mechanism;]
[…];
24
The UNCITRAL draft is still a work in progress. These four documents envisaged by the
Preamble have not yet been drafted by the Working Group.
The Preamble contemplates production of four “documents.”
25
Documents one
and two would provide “guidelines and minimum requirements” for (a) dispute resolution
providers/platforms/administrators
26
and (b) neutrals. Documents three and four would
provide (c) substantive legal principles for resolving disputes and (d) cross-border
enforcement mechanism (presumably private and public).
27
Whether these documents
would be merely persuasive in implementing the Rules, or annexed as legally part of the
Rules, has not yet been determined by the Working Group.
28
V. CONCLUSION: LESSONS AND BEST PRACTICES FROM THE EBAY EXPERIENCE FOR ODR
SYSTEMS DESIGNERS
The momentum behind global ODR continues to increase. Consumer and
business groups around the world are unanimous in promoting fair, proportionate,
24
Online Dispute Resolution For Cross-Border Electronic Commerce Transactions: Draft Procedural Rules,
Note by the Secretariat, U.N. Doc. A/CN.9/WG.III/WP.127 at pp. 5-6 (Jan. 17, 2014).
25
In earlier drafts, the “documents” were referred to as annexes. Online Dispute Resolution For Cross-
Border Electronic Commerce Transactions: Draft Procedural Rules, Note by the Secretariat, U.N. Doc.
A/CN.9/WG.III/WP.128 at p. 2 (Jan. 22, 2014).
26
At its March 24 – 28, 2014 New York meeting, UNCITRAL ODR Working Group III agreed that the
term “ODR provider” and all references thereto would be deleted from its Rules. The following
definitions of “ODR Administrator “ and “ODR Platform” would replace earlier definitions in the Rules:
ODR ‘Administrator’ means the entity that administers and coordinates ODR
proceedings under these Rules, including where appropriate, by administrating
an ODR platform, and which is specified in the dispute resolution clause.
ODR ‘Platform’ means a system for generating, sending, receiving, storing,
exchanging or otherwise processing communications under these Rules.
The Secretariat’s official report of this meeting is pending at the time this article is printed.
27
Online Dispute Resolution For Cross-Border Electronic Commerce Transactions: Draft Procedural Rules,
Note by the Secretariat, U.N. Doc. A/CN.9/WG.III/WP.127 (Jan. 17, 2014).
28
The Secretariat has recently indicated that it may be advisable not to annex guidelines to the Rules. The
Secretariat has suggested to the working group that it might wish to consider “(i) the purpose of guidelines
that address various stakeholders in the online dispute resolution process, and bearing in mind that purpose,
(ii) the relationship of the guidelines with the Rules.” He further noted the suggestion in Document
A/CN.9/WG.III/WP.114 that guidelines ought to set out best practices for ODR providers and neutrals,
while the Rules aim to establish a procedure for online dispute resolution. He also notes that it may be
advisable not to annex guideline to the Rules, as the legal nature and addressees of Rules and guidelines
differ. Document A/CN.9/WG.111/WP.127, paragraph 28; Document A/CN.9?WG.111/WP.127/Add.1.
218
effective, online, cross-border redress for low value cross-border disputes. As a result,
there will continue to be increasing demand for effective ODR systems design and
procedural rules. At the forefront is UNCITRAL’s Working Group III, whose rules
(when they are finally issued) will certainly serve as a foundational design document for
other ODR systems designers around the world.
The UNCITRAL designers have been hamstrung by a variety of controversies
over the past few years. These disagreements have slowed progress in reaching
agreement. We believe that the eBay experience and systems design can help to find a
path through some of these disagreements.
First, the UNCITRAL Rules can benefit from explicit value floors and ceilings,
similar to the eBay design. Leaving the eligibility and payout amounts indeterminate will
create downstream complexity and extend the timeframe for developing resolutions
processes. Part of every resolutions process will entail negotiating case eligibility and
determining the appropriate reimbursement amount, and whether it falls into the
procedural maximum and minimum values. By following the eBay example and putting
in specific value amounts as guidelines, the UNCITRAL ODR Rules can help to both set
buyer and seller expectations and expedite the resolutions process.
Second, it is vital for the continued expansion of e-commerce that consumers and
small to medium size businesses have access to fast and fair resolution processes.
Because of this commercial imperative, the private sector is stepping in to provide
manifold solutions to this problem. On balance, market-based approaches facilitate the
development of optional solutions for the problem of online redress. This was the
experience in the eBay marketplace. Market-based approaches require a lot of
experimentation and evolution to get right, and eBay was always tweaking and evolving
their ODR systems to account for lessons learned. As such, any ODR systems design
should not be too prescriptive, because they may hinder the innovation required to
effectively solve this problem over the longer term.
eBay has generally managed to limit the complexity and scope of claims through
categorization of claims limiting the types of permissible claims and providing a list of
specific claims, coupled with its purchase price “Money Back Guarantee.” However, as
previously noted, for “vehicle” (VPP) and “equipment” (BEPP) sales, it also imposes the
additional condition that the dispute will not be handled by the eBay ODR system if the
purchase price of the vehicle is more than $50,000 or less than $100, or in the case of
equipment if the purchase prices is more than $20,000 or less than $1000. This maximum
and minimum purchase price limitation on “vehicle” and “equipment” cases handled by
the eBay system assures its efficient operation as a low-value dispute resolution process.
It allows eBay, in responding to market conditions, as it deems necessary, to design
specific resolution processes and rules to exclude from the eBay system sales of goods
involving a purchase price which it deems inappropriate for resolution in the fast-track
low-cost high-volume eBay system.
In both the basic and specialized “Money Back Guarantee” cases, purchase price
will adjust as changes in the currency values occur from time to time, and also adjust
around the world to differences in the value of currencies in advanced, advancing and
underdeveloped economies at any given time. It also removes a major source of
complexity and controversy in the eventual deliberative resolution process, because the
law and jurisdiction to which the parties have agreed is specifically addressed and
219
resolved in the governing policy adopted by the parties in their agreement to utilize the
procedural rules.
ODR administrators, marketplaces, and payment providers need the flexibility to
design, build, and deploy both non-binding and binding ODR systems. eBay learned this
lesson through extended interactions with the global community of millions of sellers and
merchants: each seller must have the flexibility to design their own resolution processes
and policies, which are backed up by a standardized escalation process. This is the only
way to enable ODR designs to adjust to the many different types of potential disputes and
resolutions around the world, while also providing final, definitive resolutions in all
cases.
The eBay experience makes very clear that ODR systems designs should avoid
specific requirements that constrain the flexibility of disputants and administrators to
evolve ODR systems that best meet the needs of various dispute types, marketplaces, and
consumer communities. Where possible, ODR rules should articulate higher level
process requirements and values (e.g. due process, transparency, impartiality) as opposed
to detailed procedural requirements (e.g. three neutrals per case, seven days to respond).
