Warning To All Traders. ADR – Are You Compliant?
17th February, 2016
What is ADR?
ADR, or ‘alternative dispute resolution’, is a set of procedures for resolving disputes, hopefully without the need for court action.
ADR can free up valuable time and resources and reduces the risk of expensive legal proceedings. Furthermore, ADR processes are carried out in private and can be useful where you want to ensure that the dispute remains confidential.
There are various types of ADR. You should make sure you fully understand the process and potential outcomes of each one before starting any form of ADR.
The outcome of ADR is only binding if the parties reach an agreement which is set out in a contract or if the parties agree that the outcome should be binding (except in relation to arbitration which is more like court proceedings). In most types of ADR, if the parties don’t reach agreement the case can still be pursued through the courts.
Alternative Dispute Resolution for Consumer Disputes Regulations 2015 (ADR Regs)
Do the ADR Regs apply to me?
The ADR Regs apply to all business transactions involving the sale of goods, services or digital content to consumers. A consumer is defined as “an individual acting for purposes which are wholly or mainly outside that individual’s trade, business, craft or profession.”
The ADR Regs do not apply to business-to-business and consumer-to-consumer transactions.
The only other exceptions to the ADR Regs are health care professionals (under a specific EU directive), public sector providers that do not charge consumers for their services, and contracts that relate to property and tenancy agreements (unless the agreement contains maintenance services which are above and beyond the repair of the structure or exterior of the property), as these are not legally viewed as goods or services.
How do I comply?
From 1 October 2015, the ADR Regs require all businesses selling to consumers to:
1. Give the consumer the name and contact details of a ‘certified’ ADR provider; and
2. Inform the consumer about whether the business intends to use that provider.
The first requirement is only to notify the consumer of a certified ADR provider. It is not mandatory to actually use the ADR provider. If the consumer requests to use the ADR process, you can simply refuse (unless you work in a sector where the obligation to use ADR is mandatory, or where you are required by the terms of your trade association). Unreasonable refusal can, however, have cost consequences in any subsequent proceedings.
A list of certified providers can be found on the trading standards website.
If ADR is mandatory as part of your regulated sector or trade association, you will also need to include the name and contact details of the relevant ADR provider on your website and in your terms and conditions.
What is the Online Dispute Resolution Platform (ODR)
The ODR is an online platform for consumers who have a complaint about a product or service bought online. The platform is used to assist consumers to submit a complaint form to a trader based in another European country.
From 15 February 2016, all online traders (anyone who intends to enter into online sales contracts or online service contracts with consumers) and online market places (e.g. eBay, Amazon), as well as traders entering into contracts by other electronic means, must provide:
1. A link on their website to the ODR platform. The link is: http://ec.europa.eu/consumers/odr/
2. The email address of the online trader on their website.
This obligation applies irrespective of whether you market your goods or services to consumers in other European countries. These requirements are in addition to the requirements under the ADR Regs above.
If you are a business required by law or your trade association to use ADR provided by a particular ADR entity, you must also:
1. Provide a link to the ODR platform in any offer made to a consumer by email.
2. Insert into your general terms and conditions of online sales and online service contracts, information about the existence of the ODR platform and the possibility of using the ODR platform for resolving disputes in online sales.
Take Action Now – BE WARNED!
Retailers must take action immediately to comply with their obligations under the ADR Regs.
If you fail to comply with the requirements, Trading Standards may look to take civil enforcement action against you. The outcome of such action could be a court order requiring you to comply. Failure to comply with the order could result in an unlimited fine or imprisonment for up to two years.
If you would like to find out whether the ADR Regs apply to your business and what actions you should be taking to comply, please contact Aaron Vandermark on 01244 405519 or at [email protected].
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