A Greek consumer was charged by his bank twice while shopping in London. A Greek ADR led to the bank refunding the second charge to the consumer. In another case, a French consumer shopping in France asked to withdraw from a contract but was charged a €150 penalty. Following a French ADR the consumer was able to withdraw from the contract without charge. Today, the European Commission launched a public consultation on alternative dispute resolution schemes (ADR) for consumers. The Commission's aim is to increase consumer confidence in shopping in the Single Market by ensuring easier, faster and cheaper out-of-court (non-judicial) resolution of disputes between a consumer and a trader. Currently, there are at least 750 ADR schemes in the EU, but consumers cannot always get the help they need. It is estimated that losses incurred by EU consumers who had problems constitute around 0.3% of Europe's GDP. The results of this consultation, open until 15/3/2011, will be used to shape the Commission's legislative proposal scheduled for November 2011.

John Dalli, the EU Health and Consumer Commissioner said: "All EU consumers should have at their disposal a simple, quick and inexpensive way to resolve their disputes with traders. The purpose of the consultation launched today is to lead to an initiative which will ensure that consumers feel more confident in the Single Market, feel safer shopping cross-border and that the burden on national courts is reduced". To conclude: "I invite all interested parties, including citizens, to participate to this on-line consultation".

Alternative Dispute Resolution (ADR)

ADR refers to schemes available to help consumers resolve disputes with traders when they have a problem with goods or services.

The defining characteristic of ADR is that it is non-judicial. It involves a neutral third party, such as an arbitrator or mediator, who can propose a solution or bring the parties together to help find a solution. ADR does not cover customer complaint handling systems by business, amicable settlements directly between a consumer and a trader, or mediation processes within the judicial system. It primarily concerns individual cases, but can also handle together several individual cases when they are similar. ADR bodies have been more widely set up to solve disputes in the telecommunications, travel/tourism and financial services sectors. The need for ADR schemes is becoming pressing in the online environment given the increase in online shopping (from 22% in 2004 to 37%). Nevertheless, cross-border online transactions remain low (8%). One reason is the lack of confidence consumers have when shopping abroad. Indeed, 71% of consumers consider the resolution of problems more difficult when shopping abroad.

The Commission has already been active in promoting ADR. Two Recommendations on consumer ADR exist which establish a number of minimum guarantees, such as independence, that ADR schemes should respect. Several Directives either encourage or oblige Member States to set up ADR schemes in specific sectors (e.g. energy and telecommunications). The recent Directive on Mediation (to be implemented by May 2011) encourages judges to invite parties to settle their case via mediation.

Three main problems remain:

• The absence of ADR schemes in some market sectors or regions of the EU

• Limited awareness and lack of transparency: 40% of retailers⁴ do not know about ADR schemes, and there is little access to information for retailers and consumers. In 2009, only 3% of EU consumers took their case to an ADR body, and only 9% of European retailers actually used an ADR scheme.

• Traders' reluctance to engage: 64% of ADR schemes are voluntary and only 6% of European traders are members of any scheme. Traders do not always comply with decisions reached since these are non-binding.

Further action at EU level is therefore needed in order to set up an EU-wide system as foreseen in the Commission work programme 2011.