Obligations of Businesses to Inform Consumers about Alternative Dispute Resolution Entities

Are you a consumer? Professional businesses wish to find solutions in cases of disputes and not ruin their customer relationships.

Consumer protection is one of the most important areas of European Union law. A Union that does not protect its consumers, effectively discourages international commerce, online shopping and affects consumer confidence in business.

That is why the European Union, in an effort to intensify consumer protection, has developed areas of consumer protection not only in the purchase of services and goods but also at the stage where the consumer wishes to exercise his/her rights.

Because it takes time and money to bring a case to the court, Alternative Dispute Resolution (ADR) has been promoted in consumer and business agreements during the past years. However, in order to maintain a high level of protection, Alternative Dispute Resolution Entities have been established for the consumer to be able to submit a complaint. These Entities have to be licensed by the Consumer Protection Service and must meet quality requirements such as being impartial, be accessible at a low cost etc.

The use of ADR Entities is in some cases mandatory and in others not. For example, in some banking matters Banks are obligated to accept and take part in a alternative dispute resolution processes.

Consumer protection ensures, among other things, the provision of information to consumers about such Entities. European Union law requires businesses to inform the consumer about the Entity or Entities by which they are covered in case the complaint cannot be resolved by the business. Also, the business must inform the consumer whether it will make use of the Entity by which it is covered.

In this way, a business is essentially forced to explain to the consumer whether it is willing to settle a dispute that arises between the business and the consumer. We have analysed the advantages of a business to resolve disputes which arise with consumers through an ADR Entity in a previous article. Suffice it to say, however, that professional businesses always wish to find solutions in cases of disputes and not ruin their customer relationships.

It is worth noting that businesses which sell products online have an additional obligation under European Union law to provide information on their websites about the Online Dispute Resolution Platform of the European Union by providing a relevant link to their webpages.

The Cyprus Consumer Center for Alternative Dispute Resolution is an Entity approved by the Consumer Protection Service and notified to the European Commission.

This article does not constitute legal advice.

The publication of this article is partly funded by the European Union’s “Consumer Programme (2014-2020)”.


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