Cost Benefit Argument for Aggressive Corporate-Based Dispute Resolution Mechanisms (From Consumer Dispute Resolution - Exploring the Alternatives, P 297-311, Larry Ray and Deborah Smolover, ed. - See NCJ-91236)

• NCJ Number: 92432
• Author(s): J A Goodman; K Brady; M Lee
• Date Published: 1983
• Length: 15 pages
• Sale Source: American Bar Assoc
• Language: English
• Country: United States of America

Annotation

Corporate-based consumer dispute resolution mechanisms are preferable to third-party dispute resolution approaches because the corporate-based approach is more in accord with the consumer's tendency to look to the corporation to handle the complaint, fosters good customer relations, and is more convenient and less costly.

Abstract

Corporations should encourage dissatisfied consumers to seek resolution of their complaints, because unless they receive satisfaction, they will cease doing business with the corporation and will speak against the company's products to others. It is convenient for the corporation to provide an objective complaint procedure, because consumers expect the company to provide a means of resolving complaints. Third-party dispute resolution mechanisms, such as consumer action panels and the Better Business Bureau, are costly, as are litigation and administrative action by government agencies. In using third-party mechanisms, consumers also experience inconvenience in filing complaints (many agencies use barriers to control workload). Moreover, there is only a moderate chance of a satisfying resolution of the grievance. Corporate dispute mechanisms could be more cost-effective if there was greater effort to inform the consumer of the existence of such procedures, more authority was delegated to front-line representatives, greater use was made of complaint data to improve products and services, and more incentive was provided for employees to anticipate and prevent consumer problems. Seventeen footnotes are provided.