|
|
Enron Mail |
http://www.business2.com/content/magazine/ebusiness/2001/03/12/27491#
Settle This Which technology resolves disputes best? March 20, 2001 issue Michael Grebb St. Louis retiree David Hubert couldn't have been happier to score a replic= a=20 of a $3,000 Charles Eames leather chair on eBay -for only $450. When it=20 arrived, he tore open the box, pulled away the bubble wrap, and immediately= =20 sunk into the chair to ease his bad back. "As soon as I sat in it, I could= =20 tell...whoa, this isn't right," he says. "It had a bad mildew smell-I mean,= a=20 really bad mildew smell." Distraught, Hubert emailed the seller to demand= =20 that he either pay to clean the chair or take it back. The seller refused.= =20 "He basically stonewalled me," Hubert says. So Hubert filed a grievance wit= h=20 SquareTrade, a San Francisco-based startup that helps resolve disputes on= =20 eBay. A SquareTrade online mediator-a real person who corresponds with both parti= es=20 via email-immediately began negotiations. After a week of back-and-forth, t= he=20 seller finally agreed to send Hubert $150 to have the chair cleaned. Hubert= =20 and the seller never were in contact. "I think it went really smoothly,"=20 Hubert says. Mediation has been a popular alternative to lawsuits to resolve disputes,= =20 especially those involving small amounts of money. For businesses, conflict= s=20 between state and international laws have made dispute resolution costly, n= o=20 matter how big the transaction. With $657 billion changing hands through Internet transactions worldwide, i= t=20 comes as little surprise that a raft of new dot-coms plans to move the=20 mediation process further online. Everyone expects online mediation to grow= =20 as the number of transactions conducted online continues to grow. "Regardle= ss=20 of the market fluctuations and a fair amount of blood on the street,=20 ecommerce is here to stay and is growing at a steady pace," says Steven=20 Abernethy, president and CEO of SquareTrade. "There is wealth of commerce= =20 online to keep us and others busy for a while." The American Arbitration Association estimates that dispute resolution is a= =20 $200 million-a-year industry, but there's no way to know how much of that= =20 would migrate online. "I'm not sure it would necessarily shift," says=20 association spokesperson Toni Griffin. "Online transactions may simply=20 generate more disputes, which would grow the whole market." American=20 Arbitration-the largest dispute resolution company with 140,000 cases per= =20 year as of 1999 and $65 million in annual revenue-recently announced its ow= n=20 online mediation business. Online mediators agree that easier dispute resolution will drive faster=20 adoption of ecommerce by businesses and consumers, many of whom may now avo= id=20 online transactions for fear of getting hosed. According to Forrester=20 Research, two-thirds of businesses say they would not conduct an online=20 transaction with a party they don't already know. What they can't agree on is how to use technology to resolve disputes. Some= =20 companies, such as SquareTrade, eResolution, or Online Resolution, have had= =20 experience resolving disputes. They are mediating disputes online simply by= =20 substituting an online chat session or email for the conference table or=20 telephone. But a few upstarts say these companies aren't harnessing new=20 technologies that allow mediation to be automated. "This is not as simple as slapping up a Website," sniffs Charles Brofman,= =20 president and CEO of Mount Kisco, N.Y.-based Cybersettle.com. He doesn't=20 mediate disputes but offers an automated blind bid system to negotiate=20 settlements when liability has already been established. Here's how it work= s:=20 The aggrieved party enters a demand; the liable party enters the most it wi= ll=20 pay (Neither side sees the other's entry, hence the term blind bid.) If the= =20 numbers are within 30 percent of each other, the software automatically=20 splits it down the middle and settles the claim. For each dispute, the=20 parties get three tries, after which they must start over if their entries= =20 still haven't come within 30 percent. The company says the site can handle = as=20 many as 10,000 simultaneous sessions per second. Brofman says he has signed insurance companies to flat-rate subscription=20 plans in which Cybersettle offers discounts for a certain number of claims= =20 per year. "This system just takes all of the ego and personality and whittl= es=20 it down to what it should have been-settling the claim," he says. That's=20 especially important, he says, for international disputes in which cultural= =20 differences can muddy an otherwise objective claims process. Rival clickNsettle.com offers a service similar to Cybersettle's, but doesn= 't=20 limit parties to three bids per cycle. Instead, it uses a monetary=20 disincentive to stop parties from gaming the process. ClickNsettle doesn't= =20 set a bid limit, but charges a small fee for every settlement offer made. C= EO=20 Roy Israel says the fees are just annoying enough to keep parties from=20 wasting bids on outlandish demands. "It eliminates the ridiculous," he says= .=20 "It keeps someone from asking for millions of dollars. It causes people to= =20 get real-real quick. No one wants to waste $100 on bids that don't go=20 anywhere." Israel criticizes Cybersettle's three-bid process, calling it inflexible=20 because it "artificially terminates" the process even when parties haven't= =20 settled. And as you might expect, Brofman is equally skeptical of=20 clickNsettle's unlimited bid system. "If you go to infinity, people just tr= y=20 to game the system," he says. "And once insurance companies realize you can= =20 game the system, they're not going to use it." His clickNsettle.com was called National Arbitration and Mediation for eigh= t=20 years before adopting a dot-com moniker last year. "We're not just an=20 Internet startup trying to capitalize on dot-com hysteria," Israel says.=20 "We're a mediation business evolving into a Web-enabled business." In fact,= =20 its existing mediation infrastructure allows the company to give users the= =20 option of moving disputes offline if necessary. The question is whether either Cybersettle or clickNsettle-or any of the=20 other mediation sites-will catch on. "I'm skeptical of these automated=20 mechanisms," says Forrester analyst Charles Rutstein. "It's a little too=20 'Let's-let-the-machines-do-it.'" He wonders whether all the messaging=20 back-and-forth makes sense for many disputes that could be easily settled= =20 using traditional means. "Just pick up the friggin' phone," he says. Web Judges clickNsettle.com , Great Neck, N.Y. Specialty: Traditional claims process goes online Selling point: Allows each side to bid until settlement is reached (with a= =20 60-day time limit) Size: About 8,000 law firms as clients, as well as 500 members using its=20 online component pricing: The first party pays a $15 registration fee, each subsequent offer= =20 costs $10 for the first 20 days, $15 for the next 20 days, and $20 for the= =20 final 20 days Cybersettle.com , Mount Kisco, N.Y. Specialty: Automated blind-bid mediation service Selling point: Future plans include an "online small claims court" to handl= e=20 minor disputes Size: 90 employees; claims more than 16,000 registered users pricing: Fee scaled to size of settlement. If plaintiff receives up to=20 $5,000, there is a $100 "success fee"; $5,000 to $10,000 costs $150;=20 defendants' fees start at $100 for a settlement up to $5,000; more than=20 $10,000, a $200 fee. eResolution , Montreal Specialty: Is also an applications service provider, licensing its software= =20 to other dispute resolution companies Selling point: Honed experience settling domain name disputes Size: About 30 employees pricing: A sliding scale ranging from 1 percent for the biggest cases=20 ($150,000 or more) to more than 20 percent for small potatoes ($500 or less= ). iCourthouse , Lafayette, Calif. Specialty: Online jurors judge the case Selling point: "At this point, we're doing this for entertainment," says CE= O=20 Clyde Long. Size: 10 employees pricing: Free. Another service, JurySmart, costs $189 per case. Online Resolution , Cambridge, Mass. Specialty: Disputes of more than $2,000 involving insurance, employment, an= d=20 B-to-B commerce. Selling point: Tailored for common B-to-B disputes Size: 13 employees; 500 mediators pricing: For disputes of less than $10,000, each party pays $50 per hour; f= or=20 disputes $10,000-$50,000, each pays $75 per hour; disputes of more than=20 $50,000 cost $100 per hour; organizations that sign up for packages receive= =20 major discounts per case. SquareTrade , San Francisco Specialty: Mediation for the masses Selling point: Offers mom-and-pop online merchants a "Square Deal"=20 certificate-a seal of approval-for as much as $6,400 Size: More than 250 mediators and arbitrators on contract; claims to have= =20 processed more than 35,000 disputes pricing: $20 per dispute for mediation; if the transaction is valued at mor= e=20 than $1,000, it also takes a 1 percent fee. Mediators are paid on a=20 per-dispute basis. WebMediate , headquarters: Boston Specialty: Focused exclusively on business-to- business exchanges and=20 marketplaces Selling point: Brainiac board includes several Harvard and MIT law and=20 management professors. Size: 8 employees and 100 online mediators under contract pricing: Will charge clients an hourly rate for mediators; will take a cut = of=20 the mediator's fee or a percentage of monetary disputes when the automated= =20 system is used.=20 Michael Grebb (cablegrebb@aol.com) is a Washington, D.C.=01*based contribut= or=20 for Business 2.0.
|