Fair And Square - Company Business and Marketing

Industry Standard, The, Oct 2, 2000 by Jenny Oh

How e-commerce disputes are resolved electronically on SquareTrade.

Ever chicken out of buying something from an online auction because you didn't trust the seller? Or worry that you wouldn't get your money back if the purchase turned out to be a dud? San Francisco-based SquareTrade wants to help. The company has launched a Web-based dispute-resolution service for marketplaces such as eBay and HelloBrain.com.

Although escrow services are also a way to ensure a happy buyer, both the seller and buyer have to agree to use them. But sometimes satisfying the customer means more than just getting a refund, which is where dispute resolution comes in. As SquareTrade's co-founder and CEO Steve Abernethy explains, this process can give customers the necessary confidence to buy online.

Why do commerce sites need dispute resolution services?

Steve Abernathy: Marketplaces such as eBay transact huge volumes, but they can't take sides with either the seller or the buyer if someone is dissatisfied. We insert ourselves as the neutral mediator.

There may be a need for dispute resolution on unregulated auction sites, but what about on more regulated consumer marketplaces? Shouldn't customer service deal with the customer?

SA: Look at Toysrus.com and Macys.com -- both were fined for not fulfilling orders at peak times during Christmas of last year. A company makes a promise, doesn't deliver and there is no mode of accessible recourse. Is a customer going to take a business to court if she buys a $100 toy and doesn't get it on time? No. This time the Federal Trade Commission fined companies after receiving a lot of complaints.

And most businesses don't have 24-hour customer-service options. Small and medium-size Web businesses that do not have Amazon.com-level customer service in place need an alternative. That's where SquareTrade fits in.

Explain how the dispute-resolution process works.

SA: A buyer goes to the SquareTrade Web site to file an online claim form, which is sorted into a common dispute category in a given marketplace; for instance, the item was never received or it was delivered late or damaged. Once that form is filled out, we respond with common solutions to those types of disputes. An e-mail message is sent to the other party, along with a URL and password that gives the two parties access to a Web-based platform that stores their written exchanges.

What we've learned in our pilot with eBay is how to recognize and list common types of disputes that occur, alongside their outcomes. We're essentially building case law for online commerce. We're also taking suggestions from our offline mediators and adding that to the list of solutions to different kinds of problems.

So what happens when the buyer and seller can't come to an agreement?

SA: If the parties can't resolve it between themselves, they can request a human mediator. We have a network of 250 mediators around the world. If the two sides haven't reached an electronic agreement by a certain time, we alert them via e-mail to use one of our mediators. The mediators are trained, real-world [professionals] who go through an online training program. On our password-protected site, the mediator relays messages between the two parties.

As more online transactions are paid by credit card, couldn't the dispute easily be resolved by stopping payment on an unsatisfactory purchase?

SA: For the clear case of all or nothing, credit cards do offer a good way of resolving a dispute. But in our six-month pilot with eBay, only 30 percent of the disputes were about returning the item to get a full refund. The other 70 percent of the disputes were about preserving the seller's good reputation with its buyers (on eBay, for example) and were resolved with an alternative such as partial repayment or sharing repair costs.