Mandatory internal dispute resolution processes and external ombuds scheme
The ACCC considers that additional obligations are required to ensure that digital platforms act responsibly and transparently in their dealings with users; and that those users, particularly business users, have sufficient certainty to make efficient investment decisions. Robust dispute resolution processes are important to achieving this and for building consumer and small business trust in digital platforms.
Harms observed by the ACCC
- Australian consumers and small businesses often find it hard to achieve quick and easy resolution of complaints and disputes with digital platforms.
- While the ACL provides protection for consumers, the online environment presents challenges in enforcing consumer rights under the ACL. Digital platforms are not sufficiently accountable because of both the power imbalance between users and digital platforms, as well as the online nature of the service and lack of ability to contact a representative of the platform. Further, where disputes are largely low in individual value but high in volume and involve multiple jurisdictions, court enforcement at a state level is not practicable or cost effective.
- The following types of complaints and disputes arise on relevant digital platforms:
- losses caused by harmful apps, low quality apps that fail to meet consumer guarantees, and unauthorised billing issues;
- the supply of products on general online retail marketplaces that fail to meet the ACL consumer guarantees;
- sellers have inadequate access to avenues for redress when they have disputes with an online retail marketplace; and
- digital platforms often have an unqualified unilateral discretion regarding decisions to suspend or terminate a user’s account or terminate a user's ad campaign for any reason and often do not adequately explain their reasons or allow for review of the decision.
- The inability of Australian consumers and business users to resolve disputes with digital platforms can result in distrust in digital platforms, which can have negative ramifications for the economy, as well as significant consumer harm such as financial loss, loss of time and effort, social exclusion, negative impacts on physical and mental health, and reputational damage.
ACCC's recommendations
The ACCC has recommended the following to improve the process of dispute resolution between consumers, business users and digital platforms:
- Introduce positive obligations on digital platforms to meet mandatory minimum standards for internal dispute resolution processes to improve the accessibility, responsiveness, and accountability of platforms’ resolution of complaints or disputes raised by consumers and business users. In particular:
- Accessible processes: digital platforms' internal processes for resolving complaints and disputes (including contact details and guidelines) should be easily accessible from a link on the platform's website or app;
- Timely responses: users who lodge complaints or raise disputes should receive a prompt acknowledgement of receipt setting out the next steps in the dispute resolution process and reasonable timeframes for a substantive response;
- Accountability: digital platforms should be required to provide the user with a substantive response to their complaint or dispute, including a description of the resolution, an explanation of how any relevant terms of service or guidelines have been applied, the extent to which automated decision-making was used and ways to escalate the complaint or dispute;
- Human representative and monitoring: any users whose disputes are processed via automated decision-making should be provided with the opportunity to escalate their issue to a human representative; and
- Transparency: digital platforms should be required to publicly report on, or at least keep records of (via record keeping rules), key metrics such as the number and type of complaints and disputes received and resolved, the percentage of complaints resolved in favour of the user and platform respectively, the extent to which automated decision-making was used and the time taken to resolve disputes and complaints. This would allow the ACCC (or other relevant regulator) to monitor the effectiveness of, and compliance with, the minimum standards.
- The ACCC considers that such obligations should apply, at a minimum, to search, social media, online private messaging, app stores, online retail marketplaces and digital advertising services.
- Legislate to create a new ombuds scheme for digital platforms to support internal dispute resolution measures, and to provide consumer and business users of digital platforms with a pathway to escalate complaints and disputes which have not been resolved to the consumer or business user's satisfaction. The ACCC has recommended that:
- the ombuds should have the power to compel information, make decisions that are binding on relevant digital platforms, order compensation where appropriate and investigate and refer systemic issues in complaints and disputes received;
- such a scheme should be introduced into primary legislation to ensure enforceability; and
- failure by a platform to participate in the scheme or comply with an ombuds decision should attract penalties.
- The ACCC has acknowledged that any ombuds scheme would need to be subject to industry consultation and carefully designed with consideration of potential overlaps with other existing avenues for redress.
Potential implications
- Introducing minimum requirements for dispute resolution processes is intended to assist the addressing of consumer harms in a timely and transparent manner, however, this is also likely to create compliance costs for digital platforms. Platforms have identified the need to ensure ‘scalability’ of dispute resolution mechanisms, including being able to continue to use automated means to resolve a large proportion of consumer complaints and disputes that arise. The ACCC's position is that transparent and accountable automated decision-making should continue to play a role in effectively addressing large volumes of complaints and disputes. However, these must be accompanied by opportunities to escalate complaints and disputes to human representatives where necessary.
- The new ombuds scheme seeks to introduce a new player into the regulatory landscape for digital platforms. The report is inconclusive about whether the ombuds scheme would apply to digital platforms of all sizes, or just some particular identified platforms. The ACCC also acknowledges the need for careful design and alignment between Australian regulators to avoid overlap with any existing or proposed internal dispute resolution standards.