Brenda  Pomerance

260 West 52 Street apt. 27B  ·  New York, New York 10019
cellphone 347 528-3940  home/fax 212 245-3940  bpomerance@flashcom.net

April 18, 2000

Mr. Donald S. Clark, Secretary
Federal Trade Commission
Room H-159
600 Pennsylvania Avenue, NW
Washington, DC 20580

            Re:       Alternative Dispute Resolution for Consumer Transactions in the
                        Borderless Online Marketplace

Dear Mr. Clark:

I am an entrepreneur developing an automated on-line alternative dispute resolution (ADR) system for e-commerce transactions.  My system is an entirely automated “negotiation mentor” that operates according to an assisted negotiation model, and is particularly suited for small e-commerce transactions.  Our business model is to charge businesses an annual subscription fee on a sliding scale, depending on whether they have their own web site or sell only through auction web sites. 

I believe that government regulation would significantly encourage use of on-line dispute resolution systems by companies and individuals selling through the Internet (“e-merchants”).  My suggestions for appropriate regulations are as follows:

  • Before the FTC accepts a consumer complaint, the consumer must make a good faith effort to resolve the dispute.  Good faith can be shown by use of an on-line dispute resolution system compliant with [to-be-developed] FTC guidelines.
  • An e-merchant earns a rebuttable presumption of good faith by participating in an on-line dispute resolution system.  Any damages award relating to the disputed e-commerce transaction in a formal arbitration or judicial or administrative proceeding must be doubled in the absence of good faith, and trebled in the presence of fraudulent intent.

To reduce the cost to credit card issuers of chargeback processing for e-commerce transactions, the Fair Credit Billing Act should be amended as follows:

  • An electronic notice from an on-line dispute resolution system compliant with [to-be-developed] FTC guidelines serves as a written notice of a billing error from the obligor under 15 U.S.C. 1666(a).  The electronic notice must include an e-mail address for the obligor.
  • An e-mail acknowledgement from the creditor to the obligor’s e-mail address in the notice from the on-line dispute resolution system, with a copy to the on-line dispute resolution system, serves as a written acknowledgement from the creditor to the obligor under 15 U.S.C. 1666(a)(3)(A).
  • The creditor’s obligation to investigate the billing error under 15 U.S.C. 1666(a)(3)(B) is suspended until the on-line dispute resolution system notifies the creditor that the dispute resolution efforts of the on-line dispute resolution system are completed.

Additionally, other laws and regulations relating to dispute resolution should be amended so that written notice requirements can be satisfied by electronically delivered notices (including e-mail and facsimile transmissions).

Because I believe my technology model offers a non-regulatory solution to some of the FTC’s concerns, I would like to participate in the FTC’s June 2000 workshop on ADR systems.  I would be pleased to demonstrate a prototype of my system. 

I am eager to work with the FTC, the consumer advocacy community, the dispute resolution community and the business community as a voice for on-line dispute resolution systems.  I appreciate this opportunity to provide my views on alternate dispute resolution for online transactions, and look forward to the public workshop.

Very truly yours,

Brenda Pomerance