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Chatelaine's Antiques & Appraisals MagazineMarket Notes > Feature: Resolving Online Transaction Disputes

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 Brings buyers and sellers together to resolve problems with online transactions

Editor's note: Can disputes be settled in cyberspace through online mediation?, a leading online dispute resolution service, has attracted a great deal of interest from consumers and business marketplaces. Chatelaine's Antiques Collectibles & Appraisals is pleased to welcome SquareTrade as one of its valued partners.

In the dreams of Steve Abernethy, flame wars and vitriolic negative feedback will be a relic of 1990's e-commerce.

To realize his vision, Abernethy founded SquareTrade. The site offers a unique web-based system with a series of guided steps to help buyers and sellers settle disputes. If direct negotiation between parties doesn't do the trick, a mediator steps in and helps them work things out.

"The Internet is still young," says CEO Abernethy, "and it's still coming to terms with the possibilities and pitfalls of e-commerce. SquareTrade provides a critical mechanism to create buyer confidence that benefits all transactions, not just the one that's gone bad."

Abernethy and his two co-founders contacted Jonathan Zittrain, a professor at Harvard Law School and a known expert in the area of cyberlaw. Through Zittrain, the three were introduced to Professor Ethan Katsh, Co-Director of the Center for Dispute Resolution and Information Technology at the University of Massachusetts at Amherst.

Professor Katsh had recently completed an online dispute resolution pilot with Ebay. He and Janet Rifkin, Co-Director of the Center, along with Abernethy and his co-founders, germinated the idea for a business. In August 1999, they founded SquareTrade and in February 2000 launched a no-fee pilot program on Ebay. Within ten minutes, the firm was handling its first dispute.

SquareTrade has now handled thousands of cases. They've learned that less than one-third of the situations involve outright returns. Most cases fall into a grayer area of customer satisfaction.

SquareTrade CEO
Steve Abernethy
Resolving A Dispute
In a case that grew out of a sale on Ebay, a man bought an Eames chair for $800. It arrived bearing the soft patina of mold and the odor of mildew, though the seller insisted that it was clean when he sent it.

After a series of increasingly inflamed exchanges between buyer and seller, with threats of damaging negative feedback bandied about, the seller registered a "complaint" through SquareTrade in which he checked off boxes indicating what the problem was. As with real-time dispute resolutions, a large part of the process is distilling the dispute to the events, rather than the emotion that can make resolution nearly impossible.

After a series of exchanges that took place on a secure case page hosted on SquareTrade's Web site, the buyer and seller were unable to reach an agreement and requested a mediator. SquareTrade's mediation process is handled online, with no live sessions. This speeds things up because the parties involved do not have to find a time to get together.

"The mediator listened to both parties," says Abernethy, "and what came out was that the buyer really liked the chair and wanted to keep it but felt the merchandise wasn't as promised or depicted on Ebay. The seller didn't want to deal with return shipping costs and having to list the chair again, and risking potential negative feedback. So together they determined that it would cost $150 to have the chair cleaned. The seller paid $100 and the buyer paid $50, and both parties were happy with the outcome."

Since launching the eBay pilot program, SquareTrade has signed a two-year exclusive deal with the trading community.

SquareTrade now charges $15 and up for its services. The company has become partners with Onvia, a site that provides products and services for small businesses and, an intellectual capital online marketplace.

Sites that display SquareTrade's Seal have pledged to work with customers to resolve disputes through SquareTrade's neutral, third party process. "A large component of online merchants' concerns has to do with protecting reputation. And both buyers and sellers need the comfort that their concerns will be taken seriously. Often, the issues are not black and white."