Success or Failure? - Effectiveness of Consumer ODR Platforms in Brazil and in the EU

Abstract

The European Commission launched a New Deal for Consumers in April 2018. This New Deal aims at giving consumers the tools to better enforce their rights and getting compensation. In this context, the Commission stresses the importance of strengthening Online Dispute Resolution (ODR), which should give consumers easy and fast access to solve their disputes with traders. This paper explores the effectiveness of out-of-court procedures, in particular in the form of online dispute resolution mechanisms, for consumer disputes. The paper examines the effectiveness of the EU ODR platform by comparing it to the Brazilian ODR platform Consumidor.gov.br. Focusing on the institutional and procedural design of the Brazilian ODR platform and the EU ODR platform, this paper highlights the factors and incentives that may contribute to increasing consumers’ trust and traders’ engagement in ODR procedures. In view of the findings, the paper provides some policy recommendations on how the potential of extrajudicial mechanisms can be exploited in order to close the gap in consumer enforcement. The paper relies on a large dataset from Consumidor.gov.br, consisting of more than 800,000 consumer complaints.