Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
The Provision of Trustworthy Online Dispute Resolution for
Business to Consumer Electronic Disputes
Fahimeh Abedi * and John Zeleznikow **
In online trading Electronic Commerce (e-commerce) occurs through the
internet. Not only offline transactions but also electronic commerce involve
disagreements, in this case e-Disputes. Providers recognise the need to
furnish appropriate e- jurisdiction, in effect a mechanism known as Online
Dispute Resolution (ODR), in order to ensure consumers’ trust in ecommerce. However ODR profound concerns need to be addressed to
ensure consumer protection. Since trust in ODR is by its nature ‘virtual’, it is
vital that ODR providers convince e-commerce consumers that their can be
trusted. In addressing the issue of trust in ODR, this paper will make an
original contribution to understanding how global ODR systems may work to
protect consumers and safeguard e-commerce businesses. Having
investigated Alternative Dispute Resolution (ADR) and ODR services, we
conclude that it is control mechanisms that are vital to trust, with the most
powerful influence on ODR being Government.
Field of Research: Business Law
Key Words: Electronic Commerce, Online/ Alternative Dispute Resolution, Providers,
Electronic Dispute, E-Trust
1. Introduction
The Internet has created Electronic Commerce (e-commerce): consumers and businesses
engage in online transactions without boundaries of time and space. Increased use of the
internet enhances business and offers services to Online Consumers (e-consumer). Every
online transaction could, and many such do, give rise to Electronic Disputes (e-disputes),
as has happened offline (Kao, 2009). There is a need to ensure that e-disputes among
participants in e-commerce are adequately resolved (Petrauskas and Kybartien, 2011).
Language barriers, cultural differences, delivery and payment issues, and also fraud
contribute to e-disputes between businesses and consumers; (Abedi, 2011) given that
online activities take place between strangers, on a „blind‟ basis, there is potential for
mistakes, misunderstanding and fraud (Cortes, 2011).
In Business to Consumer (B2C) e-commerce, beliefs, emotion and satisfaction influence
consumer confidence and, consequently, trust (Liao, Chen and Yen, 2007). Uncertainty
over legal frameworks and lack of well-established online dispute resolution mechanisms
reduce consumer confidence, and hurt trade, in online commerce (Ponte, 2002). Online
parties may be located in different part of the world, yet contact each other by the simple
act of clicking a mouse. A Standard litigation in e-disputes would take too long and be
impractical, inconvenient, complicated, and prohibitively expensive (Shah, 2004), hence
there is a need for dispute resolution mechanisms to suit the online world.
________________________________________________________________________
*Fahimeh Abedi. PhD student, College of Business, Victoria University, Australia, Email:
fahimeh.abedi@live.vu.edu.au
**Prof. John Zeleznikow , Laboratory of Decision Support and Dispute Management, College of Business,
Victoria University, Australia, Email: john.zeleznikow@vu.edu.au
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Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
Online Dispute Resolution (ODR) involves Alternative Dispute Resolution (ADR), coupled
with the speed and convenience of ICT to fit the demands of e-commerce. ODR enhances
dispute resolution through the transformative power of the ICT (Information communication
Technology) as a Fourth Party (Katsh and Rifkin, 2001). While not limited to business to
consumer (B2C) online transactions, ODR may be particularly apt; for it uses the internet
for the resolution of e-commerce disputes which helped generate them, with the parties
frequently located far away from one another (Petrauskas and Kybartien, 2011). ODR may
be the best mechanism to resolve e-disputes, yet, in the absence of recognized global
practices, such systems may appear complex and problematic, unable to engender trust
(Vilalta, 2010).
Trust puts people into a frame of mind best able to work out their problems; people who
have been repeatedly taken advantage of may understandably enter into dispute
resolution feeling that objectively unreasonable attitudes are justified (Rule and Friedberg,
2005). To avoid this, both vendors and consumers benefit from properly designed, truly
global ODR systems (Rule, Duca and Nagel, 2011). This paper deals with the question of
how to create such „virtual‟ trust in ODR, given that ODR providers need to convince econsumers of the effectiveness and reliability of their systems, not only in order to have
ODR accepted by the general public, but also to enhance confidence in e-commerce itself.
2. Literature Review
2.1.Definition of Online Dispute Resolution
Both dispute resolution and information technology have coalesced into an effective,
flexible and affordable way for solving disputes, compared with traditional approaches.
ODR, as a synergy between ADR and information communication technology (ICT),
combines the efficiencies of ADR with those of the internet to save time and reduce costs
(Rule, 2002) in dealing with online disputes (Cortes, 2011). Fox describes ODR as dispute
resolution involving mediation, arbitration or any other form of dispute resolution taking
place outside courts and, at least partially, online (Fox, 2009). According to Hornle (2003),
“ODR is information technology via the internet, referred to as online technology applied to
alternative dispute resolution”. All kinds of „conventional‟ ADR are, in fact, represented on
the Net (Kohler and Schultz, 2004).
2.2 Trust and Redress Mechanism in B2C E-Commerce
While various disciplines have attempted to define trust, intangible part of life that it is,
there is no universally accepted consensus in the scholarly world (Kraeuter, 2002). Any
such would include, but not be limited to, consistency, proficiency, fairness, honesty,
personal empathy, loyalty, receptivity, and capacity (McCole, 2002). It implies willingness
„to be vulnerable despite the risks‟ be they financial, (potential loss), social, phychological
(acting against beliefs), technological (concern over insufficiently managed technology) or
physical ones (conduct resulting in injury or ill health) (Pennanen, 2006). Most scholars
agree that trust is a prerequisite for success in business because consumers are reluctant
to buy goods or services unless they trust sellers. The key difference between Business to
Consumer (B2C) e-commerce and conventional „real world‟ businesses is the internet,
characterised by being „blind‟, borderless, universally accessible without limits of time and
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Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
space (Kim, Ferrin and Rao, 2007). The requirements of e-commerce include:
A). Consumer trust, attitude, and willingness to buy: Ajzen and Fishbein (1980) proposed
the Theory of Reasoned Action (TRA) to categorise the psychology of beliefs, attitudes,
intentions and behaviour, the assertation that intention how to act is determined by an
individual‟s attitude towards conduct, which, in turn, is affected by beliefs. Existing
empirical research reveals that trust is closely related to attitude, which significantly
informs purchase intentions (Chow and Holden, 1997, Macintosh and Lockshin, 1997).
TRA is also the theoretical basis of studies on trust formation, especially in the context of
e-commerce (Jarvenpaa, Tractinsky and Vitale, 2001; McKnight, Choudhury and Kacmar,
2000). If trust is viewed as belief, confidence, sentiment, or expectation about an
exchange partner‟s likely intention or conduct, it may be directly related to someone's
readiness to buy from a vendor and, generally, to consumers‟ willingness to follow their
purchasing attitudes. Trust may motivate consumers more positively towards affiliation and
identification with vendors; for a consumer's trust in an e-commerce vendor is positively
related to feeling good about purchasing from him or her (Teo and Jing Liu, 2007).
B). Consumer trust and risk perception on security, privacy: in an online market these are
important factors affecting purchasing decisions. Unlike in the physical market, consumers
deal with distant vendors whom they never meet and products not to be touched and felt.
The established literature on marketing maintains that trust is negatively related to
perceived risk (Shemwell and Cronin and Bullard, 1994; Thompson and Jing Liu, 2007).
According to Ganesan (1994), it can, in fact, reduce perception of any risk associated with
opportunistic conduct.
C). Risk perception, attitudes, and willingness to buy: Bauer (1967) argues that once a
purchase has been considered as risky, subsequent consumer behaviour may be shaped
by such a perception. Recent research has confirmed that risk perception and attitudes
toward e-service, to cite Ruyter, Wetzels and Kleijnen (2001), are closely related.
McKnight and Cummings and Chervany (1998) stated that confidence in vendors is likely
to be „ fragile „if perceived risk is high, with people less likely to purchase. According to
Teo and Liu, (2007) hypothesize: consumers‟ risk perception towards e-commerce vendor
is negatively related to confidence in buying from them.
While businesses cannot directly control how their customers feel, they can create
encouraging conditions (Pichler, 2000), for consumers to feel confidence in business
benevolence and integrity (Josang, Keser and Dimitrakos, 2005). There needs to be
proper redress mechanisms to resolve consumer complaints and assist dispute recovery
in B2C transaction (Tang 2007); for its absence tends to decrease consumer confidence
(Del Río-Lanza, Vázquez-Casielles and Díaz-Martín, 2009). So, dispute redress may well
shape perceptions of the trustworthiness, integrity and benevolence of online business
(Ong, 2013). ODR creates an environment of trust in e-commerce to deal with any
potentially catastrophic impact and thereby enhance consumer perception of, and belief in,
the trustworthiness of a given service or site (Rule and Friedberg, 2005). In 2010,
eBay/PayPal handled more than eighty million e-commerce disputes between buyers and
sellers, up from twenty million in 2008 (Rogers, 2013).
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Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
3. Challenges of Trust in ODR Processes
ODR has yet to acquire sizable "mind-share" amongst consumers; efforts to promote it
have had little impact, which is why, according to Davis (2003) ODR service providers rely
on that participants, or neutral arbitrators, will respect confidentiality, refrain from being
partial or judgmental or design rules that disadvantage one side. Online opponents
negotiate who tend not to know each other, a potential obstacle to building informed trust.
While ODR may contribute in an overall sense towards it, it also relies on a comprehensive
kind of confidence, rendering the relationship between ODR and trust symbiotic (Rule and
Friedberg, 2005).
Ebner (2012) acknowledges three aspects of trust in ODR:
1) ODR as a facilitator: Growing consumer confidence in e-commerce systems may be
displayed by the degree of incorporating ODR into their financial dealings. Ongoing
improvement of the internet depends to no small extent on successful e-commerce, which,
in turn, relies on trust more than on anything else. “Transactions require trust, and the
internet is woefully lacking in trust”.
2) Users’ faith in ODR as a functional way of solving disputes: Its technology must be so
designed and it must be marketed accordingly, neither to be taken for granted. In fact, with
the still- low level of trust in ADR, what ODR provider has not heard claims that, with ODR
a foreign concept, the public would not buy into ODR, dispute resolution needed warmth
and human interaction while the internet was cold and distant?
3) Interpersonal trust: Users of ODR experience not only distrust inherent in conflict
situations they are also challenged by the online environment. While these two aspects
may have much in common, there are also conceptual differences; for each features
fundamentally different players.
People contemplating ODR need structured information to make informed choices whether
to institute the process and which provider to choose, lack of such being considered a
major current issue with ODR, essentially one of trust: Without understanding a process
that may affect one‟s rights, there is likely little confidence, not least in online neutral
arbitrators, with distrust interfering with dispute resolution. Mediators, need to build positive
relationships between parties, seeing that those involved may continue to have to interact
(Raines, 2006). Trust is a key aspect of mediation, established offline through „sessions‟;
online, this may be more difficult, though no less important, to establish and maintain trust.
When put face to face, parties may know each other and have an ongoing relationship.
However, In Online environment, disputants tend not to do so, without any real time or
virtual relationship, connected merely through an e-commerce transaction such as
business to consumer (B2C) or consumer-to-consumer (C2C), to use eBay as an
example. With e-commerce depending on email or real-time online, a mediator‟ s ability to
temper the tone of his interaction or skilfully read body language may be of little use,
making it harder to build confidence online (Van den Heuvel, 2002).
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Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
4. Trust in ODR: Solutions
„ODR, like all e-commerce, needs to have mechanisms to build consumer trust in the
goods or services, (including) legal services in the form of dispute resolution, and to
ensure consumer protection. The regulation of legal services, including dispute resolution,
need not be delegated wholly to professional organisations that (may) incorporate a
degree of self interest‟ (Teitz, 2001). Trust, control, and government are the three
components essential for the development of ODR, with trust being a perennial problem in
virtually all online activities. ODR service providers can enhance confidence in different
ways, such that, with a reputable institution furnishing reliable information, people are
more likely to choose recommended organisations, which will make users more confident
in, and be prepared to rely on, a given ODR provider. If the provider does not comply with
the indicated standard of delivery, the institution would stop using it. Trustmark is an
important example of judging ODR providers (Schultz, 2004).
By issuing press releases, and information such as telephone numbers, email and physical
addresses and data protection rules, by explaining the process and their use of third party
neutrals, trust marks and feedback mechanisms, ODR providers might create an
atmosphere of confidence; with instant feedback being a sizable advantage over ADR.
Parties ought to be allowed to provide it regardless of their success or otherwise (Cortes,
2011). The provider of information most likely to be trusted by consumers ignorant about
online dispute resolution, is usually government. Accreditation is a typical form of such
structured information. Relevant certification may be displayed through Trustmarks
(Schultz, 2004).
With the two basic kinds of trust: identification-based trust (IBT) and calculus-based trust
(CBT), the former depends on the degree that parties care about each other. ODR
practitioners may encourage parties to investigate each other‟s reputation, such as the
Feedback Rating of an eBay seller. On-line disputes often deepen scepticism towards
opposing parties and the mediator. If relationships are neither feasible nor desired,
neutrals may want to focus on Calculus-Based Trust (CBT; Raines, 2006). With CBT which
features self enforcing, binding agreements, individuals deliver what is expected of them,
so as to avoid penalties (Lewicki and Wiethoff, 2000). Settlements reached through ODR
are, as a rule, legally enforceable, as are private mediation agreements (Raines, 2006).
5. Summary and Conclusion
Trust- related issues may prevent resolution of disputes. Increased confidence in ecommerce requires high level of trust among online users. The best way to instil faith in
online transactions is through ODR, with disputants interacting exclusively online and
never meeting face to face. Online parties often hesitate to reach an agreement because
they expect that their opponent will not live up to mediated settlements or abide by
arbitrators‟ decisions. Lack of trust prevents resolution, even when disputants would clearly
be better off with one. Practitioners need to build and repair trust convincingly.
Vladimir Ilyich Lenin stated, „Trust is good but Control is better‟ (Skinner and Spira, 2003).
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Proceedings of 7th Asia-Pacific Business Research Conference
25 - 26 August 2014, Bayview Hotel, Singapore ISBN: 978-1-922069-58-0
If trust does require control, that of governments over ODR providers would enhance
public confidence, given public faith in them. They control access to litigation and have
regulatory expertise, not least on ODR providers. By raising awareness about, and
inducing trust in, architecture of reliability, they, and only they, can devise it, rather than the
private sector, through self regulation. The ideal means of satisfying the need for
unambiguous information about the structure and processes of ODR providers is by
accreditation, to be equipped by governments as its most trustworthy source who could
also provide ODR services without increased cost, if not looking for economic profits and
prepared to subsidise utterly unprofitable ventures such as Cyber Courts. Enhanced levels
of e-commerce stand to benefit business, consumers and society alike, provided that trust
is strengthened and e-consumer is better protected.
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