|1) WHAT TYPES OF ADR ARE THERE? ARE CERTAIN TYPES BETTER SUITED FOR ONLINE
There are various types of ADR currently available to individuals. Some options include: negotiation between parties, mediation, arbitration, neutral evaluation and summary trials. Each method has proven in time to be an effective solution to a particular category (or categories) of disputes. Unfortunately, the expenses involved in using most types of ADR cause the average consumer involved in a small-stakes online dispute to forego the option of resolving a particular issue out of court.
My comments provide information on Cybersettle.com, an online company established in 1998 to settle disputes online.
Cybersettle.com is the worlds first online dispute resolution system. It offers confidential dispute settlement through its secure, patent-pending website by matching double-blind offers and demands. The system started as a tool that enabled insurance companies, corporations, government agencies, attorneys and claimants to resolve disputes instantly, 24 hours a day, 7 days a week. James Burchetta, Esq., formerly a plaintiffs' attorney and Charles Brofman, Esq., formerly a defense attorney, founded Cybersettle.com in 1998. Mr. Burchetta and Mr. Brofman founded Cybersettle.com in response to parties increasing difficulty in settling cases. Their main goals were to shorten the duration of the typical litigation process and to reduce the significant expenses endured by the individuals involved.
In 1998, the top 20 insurance companies in the United States paid 34.1 billion dollars in claims administration. Currently, as a direct result of the introduction of the Cybersettle system, the insurance industry and consumers/claimants, have the opportunity to save hundreds, if not thousands of dollars per claim in administration costs.
2) ARE CERTAIN TYPES OF ADR BETTER SUITED FOR ON LINE TRANSACTIONS?
Cybersettle offers tremendous benefits to individuals involved in disputes over online transactions; it is faster, cheaper and more readily accessible than traditional forms of ADR and provides a no-risk solution that encourages all parties to give it a try.
Participants may, through the patent-pending Cybersettle.com system, submit three confidential settlement offers or demands, called "rounds," via a secure Web site. If an offer and demand are within an agreed-upon formula (typically 30% or $5,000 away from each other), the claim instantly settles for the median amount. If parties fail to reach a settlement, they can continue to negotiate without prejudice because the demands and offers are never revealed to the opponent (or anyone else for that matter).
In using the Cybersettle algorithmic program, each side tries to ascertain whether its amount is within the range of a settlement figure. By using this technology, neither side actually sees the number presented by the other, but rather, the program matches offers against demands. If both sides (consumers/claimants through their attorneys and insurance companies/defense counsel) properly value a case, the case should settle. If the case fails to settle, parties still have the option to proceed to traditional forms of face-to-face negotiation or onto litigation without ever having "shown their hand."
The Cybersettle.com patent-pending system is not limited in its applicability to merely typical insurance claim settlements. In fact, Cybersettle is an ideal forum for any dispute that involves some sort of monetary value. The advantage of this system over other forms of ADR is that it offers real-time, inexpensive and confidential results while allowing parties total control over the amounts they would be willing to give or take in order to resolve a particular dispute.
3) UNDER WHAT CIRCUMSTANCES IS ADR USED TO RESOLVE DISPUTES ABOUT CONSUMER TRANSACTIONS TODAY? HOW DOES ADR WORK IN SUCH CASES? HOW ARE DECISION MAKERS OR MEDIATORS SELECTED UNDER AN ADR PROGRAM? WHAT LESSONS CAN BE TAKEN FROM SUCH A MECHANISM?
Cybersettle.com is the first online claims resolution system to allow consumers (either directly or through an attorney) to resolve claims that are pending with insurance companies. Cybersettle.com offers a neutral environment where parties begin by entering three rounds of numbers into a secure web site. Usually, an insurance company will enter settlement figures that fall within the umbrella of an authorized policy limit, and then the consumer/attorney representative will proceed to access Cybersettle.com by using a designated pass code. The consumer or attorney will enter his/her settlement demands round by round and the computer will compare each specific demand against the respective insurance company offer. If during any round the attorneys/claimants demand is within 30% or $5000 of the corresponding offer the case will settle. The attorney or consumer will see the following message: Congratulations, your case settled for (X amount) dollars!
4) HOW ARE DECISION MAKERS OR MEDIATORS SELECTED UNDER AN ADR PROGRAM?
Using the Cybersettle.com system, the parties using the online website become the decision makers; thus there is no need for mediators. Because each side enters its own amounts, no third party opinion as to the merits of parties case is necessary. When both attorney/claimants and insurance companies accurately value a particular case and enter realistic figures, the case will inevitably settle because the system removes all posturing from the negotiating process.
5) WHAT LESSONS CAN BE TAKEN FROM SUCH A MECHANISM?
By using Cybersettle.coms secure website, both claimants and insurance adjusters can freely input realistic settlement numbers without revealing their position to opponents; this allows parties to settle claims quickly, efficiently and in good faith without the usual posturing, which occurs during face-to-face and telephone negotiations.
6) WHAT ADR PROGRAMS CURRENTLY EXIST FOR ON LINE CONSUMER TRANSACTIONS? DO THESE PROGRAMS ADDRESS CROSS BOARDER TRANSACTIONS? PLEASE DESCRIBE THESE PROGRAMS AND HOW THEY WORK? IN DESCRIBING THESE PROGRAMS, PLEASE ADDRESS ISSUES SUCH AS FAIRNESS, EFFECTIVENESS, AFFORDABILITY, ACCESSIBILITY AND DUE PROCESS CONCERNS?
There are a number of ADR programs currently available for online consumer transactions. Currently, Cybersettles patent-pending process is the first to deal directly with insurance claims and can be used as a first step in attempting to resolve any dispute that involves a monetary amount. So far, Cybersettle has successfully resolved more disputes over the Internet than any other online claim settlement system. The Cybersettle system raises no fairness concerns because each party enters its own desired settlement amount only after instructions on proper use. Anyone may use the Cybersettle system.
7) DO THESE PROGRAMS ADDRESS CROSS BOARDER TRANSACTIONS?
Cybersettle currently has offices throughout the United States, Canada, the United Kingdom. The nature of the Cybersettle process enables users in any country to submit disputes in their respective currencies.
8) DOES THIS ADR PROGRAM PROVIDE INFORMATION TO A CONSUMER BEFORE HE OR SHE IS ASKED TO AGREE TO SUBMIT DISPUTES TO THIS PROGRAM? AT WHAT POINT AND HOW IS THIS INFORMATION PROVIDED?
Yes. The Cybersettle informational website provides users with information on price and procedure. Cybersettle also requires that a participation agreement be read and agreed to before a user (Consumer/Claimant, Attorney, Insurance Adjuster or any other party) may begin to use the patent-pending process. The participation agreement appears on the first screen immediately subsequent to that where the user enters his or her password. The agreement explains the process in detail and informs parties that they will be bound by any settlements reached through Cybersettle. After a consumer, attorney or adjuster reads the participation agreement, he/she must click on either an "Agree" or "Disagree" button. If the party agrees to use Cybersettle by clicking "Agree," the party will be bound by any settlement that may be reached through the Cybersettle process.
9) WHAT ARE THE PROCEDURAL EFFECTS OF THIS PROGRAM? FOR EXAMPLE, TO WHAT EXTENT ARE DECISIONS BINDING? TO WHAT EXTENT ARE THEY APPEALABLE FOR A DECISION? IS PARTICIPATION IN THE PROGRAM A PREREQUISITE TO FILING A LAWSUIT?
Cybersettle.com may be used at any stage of a claim or litigation process (i.e. prior to filing suit, while in the discovery stage, or during a trial preparation and execution of trial proceedings). The decision is binding once a settlement has been reached. Settling through Cybersettle.com is the legal equivalent of directly negotiating a settlement to a case and signing a document stating that settlement has been reached. Once the two sides agree upon a settlement figure, only the Court or both parties may amend that agreement.
10) HOW ARE DECISIONS ENFORCED UNDER THIS ADR PROGRAM?
Settlements obtained through Cybersettle.com are binding upon both parties. Picture two parties involved in a dispute signing a contract and agreeing to be legally bound by any successful result to their negotiations. Cybersettle merely creates a forum where parties negotiate over numbers, while removing the psychological posturing from the equation. At the same time, individuals always know the dollar range that a given case may settle for and will never be surprised by an undesirable settlement.
Prior to using Cybersettles system, each participant must read and agree to be bound by Cybersettles "Participation Agreement," which states in specificity that both parties acknowledge entering into this alternative means of dispute resolution. Furthermore, parties must agree to be contractually bound by its results by clicking on the "I Agree" icon in Cybersettles Participation Agreement. Thereby, both parties enter into a valid contract enforceable at the very least in the 50 States and Canada.
11) WHAT ARE THE COSTS TO THE PARTIES ENGAGING IN ADR? WHO FUNDS THESE COSTS? IS THIS PROGRAM COST-EFFECTIVE? IS IT SUITABLE FOR SMALL-DOLLAR TRANSACTIONS? DOES THIS PROGRAM HANDLE A LARGE VOLUME OF DISPUTES? IS IT CAPABLE OF DOING SO?
The costs of using Cybersettle are fully apportioned between both parties to the dispute and are divided as follows: the party initiating the claim (the initiator), will pay a $25.00 case submission fee once three rounds of offers are uploaded on Cybersettles system.
This initial fee enables Cybersettles customer support to make extensive contact with that partys opposition (the respondent) and facilitate the respondents engagement through the use of phone support, faxed materials, mailed promotional materials and email support.
Once the respondent has engaged the system and entered demands, Cybersettle charges the initiator an additional $75.00. If the case does not settle using Cybersettles system, these are the only revenues generated by the transaction.
If a case settles, both parties pay a maximum settlement fee of $200.00 per side. If no settlement is reached the respondent (usually a plaintiffs attorney) does not incur any costs to use the system.
While Cybersettle.com is ideal for any dispute large or small, Cybersettle caters to small-dollar claims by making its pricing structure for settlement fees on a three-tiered basis. In the first pricing tier, if a case settles for $5,000.00 or less, each side pays a settlement fee of $100.00.
In the second pricing tier, cases that settle for between $5,000.00 and $10,000.00, result in each side paying a settlement fee of $150.00.
Only on the third tier in which cases settle for $10,001.00 and above, will each side pay a settlement fee of $200.00.
Because Cybersettles pricing structure take the amount of the dispute into consideration, and parties never pay more than a total of $500 to resolve a dispute (which is cheaper than litigation or offline ADR programs) Cybersettle is an ideal forum to settle disputes.
Cybersettle.coms database technology is equipped to handle a very large volume of cases. Currently, Cybersettle has 12,000 claims on its system and that number grows exponentially daily.
12) IS ADR FOR ONLINE CONSUMER TRANSACTIONS BETTER SUITED TO CERTAIN SITUATIONS THAN OTHERS - FOR EXAMPLE, CROSS-BORDER DISPUTES OR CASES LIMITED TO A CERTAIN MONETARY AMOUNT? ARE THERE ANY OTHER FACTORS RELEVANT TO DETERMINING WHETHER ADR IS SUITED TO PARTICULAR ONLINE CONSUMER TRANSACTIONS?
The premise behind Cybersettles system is that face-to-face negotiations are fraught with issues ancillary to the actual resolution of the dispute itself. Therefore, it is Cybersettles intention to give both parties to the dispute a confidential tool that is available 24 hours a day, 7 days a week, which encourages both sides to realistically evaluate their dispute without posturing.
As a result, Cybersettle has the ability to resolve any monetary dispute, no matter where parties to the dispute are located as long as both parties are willing to voluntarily use the system.
Development of Alternative Dispute Resolution Programs for Online Consumer Transactions
13) DESCRIBE ALTERNATIVE DISPUTE RESOLUTION PROGRAMS FOR ONLINE CONSUMER TRANSACTIONS THAT ARE BEING DEVELOPED BY BUSINESSES, CONSUMER REPRESENTATIVES OR OTHER GROUPS.
As a result of the influx of new cases in the State and Federal Court System, and the expenses associated with litigation, there is an emerging trend toward the use of alternate dispute resolution as a means of resolving disputes.
Organizations Such as the American Bar Association, and the Association of Trial Lawyers of America are vigorously responding to this trend by assembling study sections that are studying the effects of ADR on the court system as well as society at large. Many of these associations are also seeking to implement technology that would enable their members to use online settlement systems in an effort to conserve judicial resources.
State and Local Bar and Trial Lawyer Associations, specifically, State Bar Technology Sections are similarly exploring the use of on line ADR.
14) WHAT ARE THE OBSTACLES, IF ANY, TO THE IMPLEMENTATION OF ALTERNATIVE DISPUTE RESOLUTION PROGRAMS FOR ONLINE CONSUMER TRANSACTIONS? WHAT ARE THE INCENTIVES AND DISINCENTIVES FOR BUSINESSES AND CONSUMERS TO USE SUCH PROGRAMS?
The main obstacle to universally implementing online alternate dispute resolution is changing the behavior of a potential user.
While usage is growing exponentially, the Internet is still not universally viewed as a tool that can resolve disputes. Whether the parties to the dispute are a plaintiffs attorney and an insurance adjuster who base their current business practices on industry habits formed decades ago, or a consumer and an online business who are slowly garnering trust toward e-commerce, the most important goal of Cybersettle has been and continues to be to educate its current users and potential user base on the value of the Internet for resolving disputes.
To that end, Cybersettle works with insurance carriers, attorneys, and organizations such as state and local bar associations in order to further build awareness of the benefits of online alternate dispute resolution.
There are many incentives that a party has in using online ADR. Similar to traditional ADR, Online ADR is an economic, time efficient alternative to litigation. An additional benefit parties gain through Cybersettle is the ability to resolve disputes 24-hours a day 7-days a week. It allows an aggrieved party to reach a swift result by enabling it to move forward in a timely fashion.
A party has no true disincentive to use the system. The only drawback is the lack of education of parties as to the approximate value of their own claims. If there is a significant discrepancy in value (one party truly feels his or her case is worth $1,000,000 and the other realistically believes that its only worth $1,000), it is unlikely that parties will successfully use the Cybersettle system to settle their claim. Cybersettle is trying to eliminate even this issue by currently researching methods that will help educate parties and enable them to more accurately valuate their respective claims.
15) A VARIETY OF ARRANGEMENTS HAVE BEEN DEVELOPED THROUGH INTERNATIONAL ORGANIZATIONS AND PRIVATE SECTOR BODIES TO FACILITATE ADR, PARTICULARLY IN A COMMERCIAL GLOBAL CONTEXT. WHAT LESSONS HAVE BEEN LEARNED FROM THESE EXPERIENCES THAT MIGHT CONTRIBUTE TO BETTER UNDERSTANDING OF THIS AREA IN THE CONTEXT OF CONSUMER ONLINE TRANSACTIONS?
The cornerstone to successfully utilizing ADR in either a global, local or on-line marketplace stems from the need people have to resolve their disputes in a time efficient and cost effective manner. When both parties enter into any form of ADR in good faith with the expectations of resolving their dispute, the process is usually successful. The further benefit of online ADR and companies such as Cybersettle in the context of consumer transactions is immediacy. With traditional forms of ADR, a time lag exists from the event, which triggers the dispute till its ultimate resolution because the process still involves coordinating the efforts and schedules of the parties involved.
In contrast, either party can immediately initiate online ADR at any time, which is more analogous to online consumer behavior patterns.
16) TO WHAT EXTENT ARE MECHANISMS THAT HAVE BEEN DESIGNED TO PREVENT DISPUTES FROM ARISING IN ONLINE CONSUMER TRANSACTIONS, SUCH AS ESCROW ACCOUNTS, BEING USED IN THE ONLINE WORLD? ARE THERE LEGAL OR OTHER OBSTACLES TO THE DEVELOPMENT OF THESE TYPES OF MECHANISMS?
It is important to note that on-line ADR will work only when the basic ground rules are acceptable to both parties to a dispute. Therefore, if a dispute arises where monies are escrowed, both sides must agree to the terms of the escrow agreement in the same manner as with face-to-face negotiations.
In the context of on-line ADR companies such as Cybersettle clearly outline the specific dispute resolution ground rules in its participation agreement prior to usage of the system. When both sides agree, an offer is confidentially matched up against a demand for payment. If the settlement amount is reached, the monies will be paid according to the terms of the participation agreement, and according to industry customs and rules and regulations related to commercial and consumer transactions.
Cybersettle can alter or amend the participation agreement to meet the needs of two parties who have special requirements for on line ADR.
17) THE OECD "GUIDELINES ON CONSUMER PROTECTION IN THE CONTEXT OF ELECTRONIC COMMERCE" ENCOURAGE BUSINESSES, CONSUMER REPRESENTATIVES AND GOVERNMENTS TO "WORK TOGETHER TO CONTINUE TO PROVIDE CONSUMERS WITH THE OPTION OF ALTERNATIVE DISPUTE RESOLUTION MECHANISMS THAT PROVIDE EFFECTIVE RESOLUTION OF THE DISPUTE IN A FAIR AND TIMELY MANNER AND WITHOUT UNDUE COST OF BURDEN TO THE CONSUMER. " WHAT ARE SOME STEPS THAT COULD BE TAKEN TO IMPLEMENT THIS PRINCIPLE? HOW CAN ISSUES SUCH AS THOSE RAISED IN QUESTIONS 4 THROUGH 7 (ABOVE) BE CONSIDERED IN THIS CONTEXT?
In order to protect consumers online, ADR providers must ensure that their services are adequately explained and that procedures and costs are fully disclosed; Cybersettle is clear in all these regards. The participation agreement fully outlines the process for both consumers and attorneys who may represent consumers. The participation agreement states that an attorney must have his/her clients consent prior to using Cybersettle to settle a claim and common law agency principles protect a consumer from unauthorized use of Cybersettle.com by his or her attorney.
18) WHAT ISSUES ARE RAISED OR CREATED FOR ADR, IF ANY, BY ONLINE CONSUMER TRANSACTIONS THAT DO NOT EXIST IN THE TRADITIONAL, OFFLINE ENVIRONMENT?
Consumers currently require faster and cheaper methods of resolving large quantities of disputes that involve smaller dollar values. Cybersettle meets these requirements and goes farther as to allow parties to know instantly, upon submitting a demand, whether or not their claim settled.
Role of Governments
19) WHAT SHOULD BE THE ROLE OF GOVERNMENTS, IF ANY, IN CONNECTION WITH THE USE AND/OR DEVELOPMENT OF ALTERNATIVE DISPUTE RESOLUTION PROGRAMS FOR ONLINE CONSUMER TRANSACTIONS?
Cybersettle.com ensures that its systems users (consumers or attorneys representing consumers) are protected by fully informing them of all costs and procedures involved in settling a claim through its website. The government's role concerning online ADR is to prevent deception or bad faith systems that do not fully disclose all aspects of the ADR process. Cybersettle works diligently with legal consultants, bar associations and consumers to make sure that its ADR system is fair, user-friendly, and fully understandable to all parties that use it.
20) WHAT, IF ANY, U.S. LAWS OR INTERNATIONAL TREATIES TO WHICH THE UNITED STATES IS A MEMBER WOULD HAVE TO BE EXAMINED AS POTENTIAL BARRIERS TO IMPLEMENT EFFECTIVE ALTERNATIVE DISPUTE RESOLUTION PROGRAMS FOR ONLINE CONSUMER TRANSACTIONS.
The government may want to examine the enforceability of online settlements in other countries. International jurisdictional questions may arise when the Internet is used to resolve disputes between individuals in two different countries; this may be an area of litigation and may need some regulatory language. Cybersettle has legal opinion suggesting that settlements on its system are enforceable in the United States and Canada.
21) WHAT SHOULD BE THE PRIMARY FOCUS AND SCOPE OF THE PUBLIC WORKSHOP ON ALTERNATIVE DISPUTE RESOLUTION FOR ONLINE CONSUMER TRANSACTIONS?
The workshop should be a discussion centered on the most appropriate way to deliver effective ADR to consumers. Issues that should be addressed are: confidentiality, speed, affordability, effectiveness, accessibility and protection of consumers.
22) ARE THERE ANY OTHER INTERESTS NOT PREVIOUSLY DESCRIBED IN THIS NOTICE THAT SHOULD BE REPRESENTED AT THE WORKSHOP?
Cybersettle has spent years researching the most cost-effective methods for individuals to resolve disputes of any nature online. The workshop should emphasize the most effective ways of delivering ADR to consumers over the Internet and to discuss ways of raising consumer awareness of and confidence in Internet Dispute Resolution technology.