Dispute Resolution in Social Media and Internet Transactions, Research Paper Example

The leading social media site, facebook, has over 1 billion worldwide users. Facebook provides a way for individuals to interact with each other, and also provides a forum for businesses to promote themselves, establish and maintain contact and communication with customers and potential customers, and advertise their goods or services. While facebook can help businesses support and sustain their interests, the social media site is not an e-commerce site. Most businesses that promote themselves on facebook use the platform as a means to draw customers to physical locations or to entice customers to follow links to the businesses’ sites for the purpose of conducting transactions online. When a customer has an issue with a transaction and wishes to dispute charges, return products, or otherwise resolve problems related to the transaction, most businesses typically have rules and guidelines in place to deal with such issues. When the established rules or policies fail to facilitate a satisfactory resolution for the customer, there are other options the customer can explore. The means of disputing the outcome of a transaction outside of the confines of the established guidelines and procedures businesses have in place is generally referred to as Alternative Dispute Resolution. In the world of e-commerce, it is becoming increasingly common for ADR to take place through online dispute-resolution organizations; this particular subset of ADR is typically referred to as Online Dispute Resolution, or ODR (Cortes, 2012).

While it is often possible to resort to litigation to settle disputes between consumers and e-commerce sites, such actions are often prohibitively expensive. Rarely would either side in a typical dispute wish to take such issues to court, though in instances where large numbers of dissatisfied consumers are concerned, the option of entering into a class action suit is always a possibility (Fowler, 2013). In most instances, however, it is in the interests of both parties –the business and the consumer- to resolve the matter as quickly as possible. For the consumer, a quick resolution simply brings an end to the situation; to the business, a quick resolution will hopefully result in a satisfied customer and allow the business to avoid negative publicity.

Short of litigation, some alternative methods of resolving disputes include negotiation, mediation, and as a last resort, arbitration (Cortes). Negotiation can, of course, take place directly between the consumer and the business; this approach can often bring about a resolution to a dispute before it becomes necessary for either party in the dispute to involve outside actors. If a consumer is unable to reach a satisfactory result after attempting to deal directly with a business, the option of contacting an organization that facilitates ODR may be a logical next step. Even in instances where litigation is a potential option, some jurisdictions require the parties to attempt to resolve their differences through some form of ADR before filing suit (Cortes).

If negotiation fails to resolve a dispute, the next step for consumers may be mediation. Organizations such as SquareTrade have helped to resolve millions of disputes for ebay, the online auction site (Cortes). ODR organizations often utilize technology to help facilitate the smooth and efficient handling of mediation, although actual human mediators are typically involved in the process as well. In mediation, the two parties attempt to reach a satisfactory resolution to a dispute in a process that is facilitated by a neutral third party. If mediation fails to help the parties reach a satisfactory resolution to the dispute, the final step (or the final step before litigation) is typically arbitration. The process of arbitration is not unlike mediation in some ways, as it is facilitated by a neutral third party. Unlike mediation, however, arbitration does not require that the two parties agree to a mutually-satisfactory result. Instead, the two parties each present their case to the arbitrator and it is then up to the arbitrator to decide how to resolve the dispute. In most cases, if the two parties have mutually agreed to enter into arbitration, each party has also agreed beforehand to abide by whatever decision the arbitrator reaches. ODR organizations can and do facilitate each of these steps for consumers who dispute transactions, thereby offering alternatives to consumers to fill the gap between dealing directly with businesses and seeking redress of disputes through litigation (Fowler).

For disputes where legal action is appropriate or necessary, the issue of jurisdiction is significant. Leaving aside issues involving U.S. consumers conducting transactions with international businesses, jurisdiction is a relevant issue for transactions that take place within U.S. borders. Each state has its own set of commerce laws, but many transactions on the Internet take place between businesses and consumers who are located at geographically-distant locations. The Full Faith and Credit Act of the U.S. Constitution ensures that legal judgments reached in one state are enforceable in other states (harvard.edu; n.d.). Enforcement can still be impractical, however, and in the Internet age legal consideration has been given to determining whether out-of-state businesses are within the jurisdiction of other states under certain circumstances. The U.S. Supreme Court has ruled that a business that has had “sufficient ‘minimum contacts’ with (another) state” is considered to be within the jurisdiction of that other state (harvard.edu). Businesses that regularly use the Internet to sell to consumers in other states are, then, considered to be within the jurisdiction of those other states, regardless of whether or not they have a physical presence in those states.

Of the three branches of the U.S. government –the Legislative Branch, the Judicial Branch, and the Executive Branch- each has its own role to play in regulation and oversight of consumer transactions that are facilitated by social media and that take place over the Internet. The Legislative Branch of government creates the laws that regulate commerce at the federal level, while the Judicial Branch is responsible for dealing with adjudicating legal violations and disputes. The Executive Branch of the U.S. government includes the President as well as the members of the President’s Cabinet; among these Cabinet members is the Secretary of Commerce, who helps develop policy and guide the creation of legislation applicable to, among other things, interstate commerce. Recent discussions about an Internet sales tax highlight how each branch plays a role in regulating Internet commerce: discussions and negotiations about a possible Internet sales tax include input from and the involvement of the Commerce Secretary; the drafting of a law or laws pertaining to an Internet sales tax will be the domain of the Legislative Branch; and potential violations or other legal issues pertaining to this tax will be the domain of the Judicial Branch (Cortes). It is difficult to say with certainty that any one branch of government plays the largest role in the regulation of online commerce, though there is no question that the creation of laws pertaining to the Internet marketplace will likely have a significant impact on the future of business in that arena.

The use of social media offers enormous opportunities and significant challenges to businesses. Social media platforms allow businesses to potentially reach millions of consumers, but social media missteps can quickly result in a backlash against a business (Lipka, 2013). The typical agency relationship is developing in new ways on social media platforms, as some uses of social media are carried out simply by sending messages to consumers via Twitter, facebook pages, and other forums. When such messages become problematic for businesses, it is not the responsibility of the social media site to resolve these problems. In cases where businesses use social media platforms for paid advertising, then the relationship between the business and the social media site operate in the same manner as would any other advertising medium, such as television, radio, or print (tcii.co.uk; n.d.). In any use of social media, however, it is the ultimate responsibility of the business to maintain control and oversight of its brand and its messages, and to develop an understanding of the potential benefits and pitfalls that await businesses in this still-growing medium.


Cortes, P. (2012). Developing Online Dispute Resolution for Consumers in the EU: A Proposal for the Regulation of Accredited Providers. International Journal of Law and Information Technology19(1), 1-28.

Fowler, C. (2013, May). New ODR Initiatives at OnlineMediators.com, OnlineArbitrators.com & OnlineDisputeResolution.com. Retrieved from http://www.mediate.com/articles/CaseloadManagerPR.cfm

Harvard Law School (n.d.). E-Commerce: An Introduction. Retrieved from http://cyber.law.harvard.edu/ecommerce/disputes.html

Lipka, M. (2013, January 17). Social media dispute resolution stumps some companies|. Retrieved from http://www.reuters.com/article/2013/01/17/net-us-consumer-complaints-socialmedia-idUSBRE90G0XQ20130117

Tcii Strategic Management and Consultants (n.d.). The social media agency relationship: a guide for businesses. Retrieved from http://www.tcii.co.uk/site/wp-content/uploads/2012/03/The-social-media-agency-relationship-a-guide-for-businesses.pdf